The Royal Bank of Scotland (LON:RBS) has settled a £200 million agreement with angry shareholders regarding the 2008 cash call.
This has been seen by many as a last-ditch attempt to avoid the 14-week trial and the appearance of former chief executive Fred Goodwin in the High Court.
“The directors met last night to consider the legal advice and took the decision that this matter will not now go to court.” said a spokesman for the RBS Shareholder Action Group.
The trial was due to begin on 22 May but it was adjourned three times in order to give the bank the chance of a generous settlement offer for investors and shareholders.
There is only a slim possibility of a trial, based on claims by Neil Mitchell that sufficient funds had been raised by a group of RBS investors to continue with the case.
The 82p-per-share offer has been accepted by most shareholders, however, this was initially rejected by a few “diehards”.
If the trial had gone through, it would not only have been embarrassing for RBS but would have cost the taxpayer-owned lender up to £29 million.
RBS is still 71pc owned by the state. There remains little prospect of it ever recouping the money it paid to avert its collapse after the financial crisis.
This is in contrast to Lloyds (LON:LLOY) where the government recently sold its last remaining stake in the lender, which took over HBOS during the crisis before receiving £20bn of rescue funds from the government.
Goodwin was stripped of his knighthood after RBS’s near-collapse during the financial crisis and also agreed to have his pension reduced. He has kept a low profile since leaving the lender at the time of its taxpayer bailout in 2008.
Shares in RBS fell 1.1 percent to 256.85p.