Royal Bank of Scotland is facing another embarrassing legal wrangle, shortly after averting a showdown with 9,000 shareholders.
Private jet operating company London Executive Aviation (LEA) is suing the lender for around £4.5m for alleged interest rates swaps misselling. The case is due to come to court on Wednesday morning, barring a last-minute settlement.
High Court documents, filed by LEA and seen by City A.M., disclose internal emails in which RBS employees plot to “scare the shit” out of the company and encourage its bosses to enter into “contracts for complex interest rate derivatives”.
Company director Patrick Margetson-Rushmore resisted RBS employees’ efforts to enter the company into any interest rate “hedging” arrangements in late 2007, the documents say.
LEA, which is being represented by FPG Solicitors and Cornerstone Barristers, is claiming that RBS then devised a scheme to change Margetson-Rushmore’s mind using “graphical exaggerated/ unwarranted risks”.
In February 2008, Margetson-Rushmore was persuaded to enter into interest rate derivatives contracts. They were designed to protect the firm against interest rate rises, which subsequently collapsed, costing the firm an estimated £4m.
LEA is the latest in a string a small companies to sue the bank, claiming to have been missold products which saddled it with high costs.
An RBS spokesperson said: “We believe we have strong defences to this claim and will defend it vigorously. The language referred to, which forms part of the claim by London Executive Aviation Limited, was ill-judged and is not condoned by the bank.”