RBS to lodge defence in 4 bln stg shareholder lawsuit

LONDON, Dec 13 (Reuters) - Royal Bank of Scotland said it and its former bosses may have made bad businessdecisions in the past but that does not mean they misledinvestors or acted illegally, as it prepared to lodge itsdefence against a lawsuit from shareholders.

RBS said it planned to file its defence against a 4 billionpound ($6.5 billion) lawsuit in London's High Court later onFriday.

The Royal Bank of Scotland Shareholder Action Group is suingthe bank and four former directors on behalf of about 100institutions and 10,000 private shareholders, alleging they weremisled over the bank's financial strength in a rights issueprospectus published months before RBS almost collapsed.

Fred Goodwin, the disgraced former chief executive of RBSwho was ousted at the time of the government bailout, is amongthe directors accused.

"Had shareholders been given the true picture of the bank'sposition, they would have had a better opportunity to assess therisks which caused the shares to collapse and led to billions ofpounds of losses for private and institutional shareholdersalike," the action group said in a statement on Friday.

RBS is 82 percent owned by the UK government after the 45billion pound taxpayer bailout in October 2008, months after therights issue which was announced in April.

"While RBS and its former directors made some businessdecisions that have been criticised, this does not mean thatthey misled investors or acted illegally," RBS said in astatement.

"We believe we have strong defences to the claims that arebeing brought against the group and that is why we intend todefend these vigorously and to protect the interests of ourshareholders including UK taxpayers."

The Shareholder Action Group could be joined by some ofBritain's biggest institutional investors, who are part of aseparate group considering lodging a claim.

Prudential, Standard Life, Legal & General and the Universities Superannuation Scheme (USS) arepart of the group, who took up about 10 percent of the 12billion pound rights issue under scrutiny.

The case poses a dilemma for large institutions, however, assome remain leading RBS shareholders and could see the value oftheir investments sink if the Edinburgh-based lender loses thecase.

Goodwin, dubbed "Fred the Shred" for his cost-cuttingpolicies, received a knighthood for services to banking in 2004but was widely blamed for many of RBS's later troubles, and wasstripped of his title in 2012.