RBS close to settling lawsuit brought by former investors. Now Treasury Committee must get some answers

This is an ideal issue for Andrew Tyrie's successor to pick up and run with

Former RBS boss Fred Goodwin will not have to testify now RBS has settled case brought by former investors (Getty)

Just hours before the start of a civil trial pitting Royal Bank of Scotland against former investors that backed the bank’s record £12bn cash call in 2008, it appears that a deal is in the offing.

The former shareholders (including some current employees by the way) claim that the bank didn't give them the true picture of its finances before they took the plunge, and unlike most of the bank’s big institutional backers, they refused to settle at an earlier stage, preferring instead to stare down the bank.

It's worked. I’m told the offer that they're chewing over is double that accepted by the City institutions that signed up to earlier deals.

Regardless of what you think of the merits of their case, the mere fact of the improved offer amounts to a victory for the little guy. The 9,000 or so hold outs include among their number some very wealthy individuals, and some institutions too, but they’re mostly small investors.

So hooray for David and his slingshot, even if it did take Blackpool Tower owner Trevor Hemmings and his millions to provide the stones.

A trial would have been something. It would have been very much in the public interest to see the issues at hand being given a public airing. But there usually comes a point in civil proceedings where you pretty much have to take the money.

It looks like the investors have reached that point and they can at least take some comfort from the fact that they will still have made life very uncomfortable for those in the firing line.

I can’t imagine the last few weeks have been terribly pleasant for former CEO Fred Goodwin, or his colleagues who were similarly named in the procedings. The prospect of being grilled by QCs as the trial date got closer must have weighed heavily on their minds.

If there is any justice, they should still suffer some sleepless nights.

The case has raised or re-raised too many questions for that not to happen.

For a start, RBS has spent a staggering amount of taxpayers’ money (we still own a shade over 70 per cent) on defending it. More than £100m all told, and it paid the legal fees for Mr Goodwin and co.

There remain real questions about the way the bank handled the defence, and its willingness to let the case go up the wire like this, all the while racking up costs.

It has also again put the spotlight on all the old questions about the institution and how it was operating in the run up to the financial crisis, and about corporate governance more generally.

Mr Goodwin was paid millions, and even though a lot of his wealth was tied up in RBS shares, he remains a very rich man.

He was held up as a banking superstar, a man whose talent meant he “deserved” his outsized pay packages.

A fallacy, but it didn't stop the bank from employing a legion of PR people to berate and bully those who criticised him (myself included).

Worse still, the same excuses for the crazy packages he was handed are regularly trotted out for the even crazier packages handed out to today’s banking chiefs and to other senior businessmen.

Arrogant CEOs still pay people an inordinate amount of their shareholders' money to shout at their critics for them.

They wine and dine the powerful, while the people who are supposed to oversee their activities tamely acquiesce to their every desire. Meanwhile big institutional investors only seem to wake up when its time for a boardroom lunch.

So, think RBS couldn't happen again?

A number of MPs have suggested that the Treasury Committee should launch an investigation into the issues raised by this case in the next Parliament. Some them were members of the old committee and will sit on the new one

Unfortunately, they will be denied the services of one of Parliament’s most feared interrogators in Andrew Tyrie, the longtime chairman who is stepping down as an MP after 20 years.

However, this case presents a way for his replacement to make their name, an issue for them to pick up and run with, and a way for them to show that the new committee will be every bit as independent and effective as Mr Tyrie’s surely were.