By Kirstin Ridley and Andrew MacAskill
LONDON (Reuters) - Royal Bank of Scotland (L:RBS) is demanding that thousands of shareholders suing the bank over a 12 billion pound ($15 billion) cash call in 2008 prove they have appropriate insurance cover to meet the hefty risks of a trial now slated for May.
RBS said the RBoS Action Group, a 27,000-strong group of retail shareholders backed by around 100 institutions, had so far declined to give the bank assurances that they had adequate legal expenses insurance to cover their costs if they lose the case, according to court documents seen by Reuters.
State-controlled RBS offered five investor groups a total of 800 million pounds last month to draw a line under allegations of omissions and mistatements to shareholders during an emergency rights issue at the height of the 2008 credit crisis.
Four separate investor groups accepted the offer, leaving the RBoS Shareholder Action Group the last claimants to shoulder the costs of proceeding to a trial that has now been delayed and shortened as both sides hone their arguments.
The RBoS Action group, which is demanding damages of around 850 million pounds, has suggested that the case can be heard over 12 weeks from May 22, according to court documents.
A lawyer for the action group urged RBS to "put up or shut up" at a pre-trial hearing on Wednesday, calling questions about "after the event (ATE)" insurance, which protects against paying opponents' costs if legal cases are lost, "extremely destabilizing and distracting".
"We can't see any conceivable basis on which the defendants are entitled to have information about the ATE position," said Jonathan Nash, for the claimant group. "Still less do we think there is any proper basis for an application for security for costs to be made in this case."
RBS declined to comment.
The claimants, who plan to call disgraced former RBS chief executive Fred Goodwin to court, say they have funding from a variety of sources, including private individuals and professional litigation funders.
Goodwin asked shareholders to stump up 12 billion pounds in May 2008 to bolster the bank's capital position just months before the bank imploded at the height of the credit crisis, forcing a taxpayer bailout.
Shareholders, many of whom were long-term RBS employees, lost around 80 percent of their investment.