Half of FTSE100 High Court action involves leading banks

The UK’s top four banks accounted for almost half of all litigation against FTSE100 companies in the High Court over the past year.

In total, 43 per cent of all High Court cases involving FTSE100 companies featured either Barclays, HSBC, Lloyds Banking Group or Royal Bank of Scotland, according to research by Sweet & Maxwell. The figures relate to the period 1 July 2010 to 30 June 2011.

In the preceding 12 months the same percentage of High Court proceedings concerning FTSE100 companies involved at least one of the four banks.

In the year to 30 June 2011 there were 150 High Court cases with FTSE100 companies on one side and, of these, 64 involved the UK’s top four banks. In the previous year they were present in 77 of the 179 FTSE100 High Court cases.

Sweet & Maxwell attributes the banks’ high appearance rate in the High Court to the continuing fall out from the credit crunch, but that actual cases are likely to represent just ’the tip of the iceberg’ of commercial disputes as a high number settle before reaching court.

Reynolds Porter Chamberlain’s financial disputes head Tom Hibbert said: “We’re now approaching the end of the window in which claims can be made relating to complex financial products that were sold at the peak of the financial services boom.

“Businesses and investors may have initially attempted to renegotiate financial products they were sold, but many will now realise that these are more or less worthless. They may feel they have no other option but to launch a legal claim.
“Banking litigation teams across the City are being kept incredibly busy. The number of new claims being issued may have dropped, but the claims are typically very high value and take a significant amount of time to resolve.
“The continuing market volatility is also likely to lead to a further spate of claims. Whereas in the US high value claims are often issued immediately, in the UK firms often try to reach a commercial compromise, which can typically take 12-18 months to resolve.”

Sweet & Maxwell’s results were based on Lawtel’s daily cause list service.