The Royal Bank of Scotland (RBS) has said that it is considering issuing shares in order to settle a £4 billion lawsuit by aggrieved investors over its rights issue.

The RBS has been sued by about 17,000 people and 140 institutions, who invested in a £12billion rights issue in 2008 after the company manipulated the outlook for the issue. Officials have indicated that lawyers from the two sides have not held talks on a possible share settlement. The indications are that the bank might be ready to settle the case with the investors.

The Royal Bank of Scotland Shareholders Action Group, which represents of several groups participating in a class action suit, has said that it is going to court with the suit. "We too have heard these rumours, however we are looking forward to seeing them in court as we believe very strongly in our case," said a spokesman.

RBS has not commented on the reports yet. Prudential, Standard Life, Legal & General and the Universities Superannuation Scheme (USS) are considering if they should join the lawsuit.