A JUDGE pressed pause on a £700 million court battle yesterday after Royal Bank of Scotland (RBS) shareholders were split on whether or not to settle with the lender.

The 9,000-strong group claim the bank misled them about the strength of its finances when they were asked to inject £12 billion of extra cash in 2008.

The request came after the bank led a consortium that spent £49bn buying Dutch bank ABN Amro, and the shareholders – including almost 20 institutions and thousands of retail investors – claim they suffered heavy losses when shares in RBS lost 90 per cent of their value.

The drop came before the UK Government bailed out the lender and the court case could see disgraced former chief executive Fred Goodwin, who oversaw the rights issue, take the stand to give evidence.

He was last called to publicly account for the bank’s fall by the Treasury select committee in 2009.

Other executives are also expected to face questions that could give the public new insight into the actions that led to the bank’s near-collapse and £45.5bn taxpayer bailout.

However, RBS has offered to settle with the group to avoid the trial, which is expected to last about 14 weeks.

The case, which was supposed to begin on Monday. has already been delayed twice, but lawyers for the RBS Shareholder Action Group asked for another adjournment when it called at the High Court in London yesterday.

Setting a new trial date of June 7, the judge warned the group that time was running out to decide on an out-of-court settlement.

Acknowledging the “exceptional case” has “exceptional logistical problems”, Mr Justice Hildyard said: “We must have certainty one way or the other. The court must know whether the matter is to proceed or not.”

Johnathan Nash QC, acting for the claimants, told the judge: “Progress towards a settlement remains good. We remain hopeful it will be possible to reach a final compromise of the claims made in these proceedings.”

It is understood that most of the shareholders have agreed to accept the sum on offer from the bank.

Even though the trial has not begun, legal costs have surpassed £100m.

The bank has settled compensation claims brought against it by other shareholder groups in connection with the 2008 rights issue.

But the lender, which is still 73 per cent owned by the government, stressed those payments were made without any admission of liability.

The case comes one month after Chancellor Philip Hammond revealed the government was prepared to sell its majority stake in the bank at a loss to the public purse.