The Daily Update - UK Brexit / RBS

David Davis, the UK government's Brexit minister said on Sunday that although he thought that the UK could negotiate a deal with the EU over Britain’s exit from the EU, he was prepared to walk away from the talks unless the demands for the EUR 100 bln ‘divorce’ settlement were dropped. According to reports, several EU member states requested that EU negotiators raised their initial calculations for the amount of money the UK was liable for. Davis said, ‘We don’t need to just look like we can walk away, we need to be able to walk away’.

The threat comes as Theresa May announced that formal negotiations with the European Union will begin just 11 days after the general election result on the 8th June. In a stark warning May said, ‘There are just 17 days to go until this crucial General Election. Just 11 days after that, the European Union wants the Brexit negotiations to begin, the UK's seat at the negotiating table will be filled by me or Jeremy Corbyn. The deal we seek will be negotiated by me or Jeremy Corbyn’ adding ‘there will be no time to waste and no time for a new government to find its way. So the stakes in this election are high’. The Prime Minister has repeatedly said that a bad deal for the UK is worse than no deal at all. Also, maybe weighing on May’s mind is the latest polls showing that Labour have closed the gap to 9pts in the election race, since the release of the Tory manifesto, YouGov poll for the Sunday Times now puts Labour on 35% with Tories still head on 44%, however this is down from the 20% lead the Tories were consistently polling just a few days earlier.

Also this morning just hours before a High Court trial, Royal Bank of Scotland has doubled the settlement offer to investors in an effort to avoid the details of the lead up to the GBP12bln rights issue in 2008 being aired in public. The trial is centred around Fred Goodwin, the former chief executive of Royal Bank of Scotland, and his knowledge of how bad the financial situation was at RBS when they tapped investors in a GBP12bln rights issue just months before being bailed out by the UK government to the tune of over GBP45bln. Of particular interest to the thousands of shareholders suing RBS is the prospectus in the rights issue, which they claim covered up the true financial position of the bank through a series of misleading statements. Today’s offer to shareholders is 82p a share, nearly double the previous 43.2p it had offered. To date RBS has already settled with 80% of claimants by value. At the end of last year the bank earmarked GBP800mln to cover all settlements with shareholders; however the latest offer is expected to add tens of millions to that settlement, in addition to the GBP100m legal costs already incurred fighting the case. However, it does seem some of the shareholders do indeed want their day in court. As the revised offer was delivered last night by RBS chief executive Ross McEwan, he was told ‘it is not enough’.