Hedge fund sues RBS for €250m withdrawal

Royal Bank of Scotland is embroiled in a multi-million pound lawsuit after reversing a €250m ($394m) investment by ABN Amro in a London hedge fund shortly after its takeover of the Dutch bank.

Merebis Capital Management has filed a case in London’s High Court, claiming it is owed a penalty fee of £17.8m ($35m) for the early withdrawal by ABN, which was repaid most of its investment earlier this month, prompting the closure of the hedge fund.

The withdrawal of the cash by ABN helps bolster RBS’s recently rebuilt capital base and partially overturns a policy of investing in hedge funds to boost the amount of business done with the funds, including sales to private bank clients. It came as two other hedge fund investments by the bank turned sour.