RBS/ULSTER ‘GLITCH’: Slog survey of users plus analysis of the numbers raise further doubts. - The ‘problem’ that netted RBS an extra £73bn of liquidity
NatWest….saved by the bell?
A broad spectrum of NatWest/Ulster Bank customers and
suppliers have raised new doubts about how and why last week’s RBS
‘glitch’ occurred. Also RBS’s current financial position doesn’t inspire
confidence: and the ‘glitch’ gave the Group what might have been a
vital windfall of £73bn in liquidity.
Yesterday, The Slog put out an appeal to those private and business
users affected by the group’s Nat West/Ulster ‘computer problem’. I
asked them to supply any and all experiences in recent times suggesting
that this site’s suspicions about the explanation offered for hanging
onto customer monies might be justified, or just pure conspiracy theory
bollocks.
The inbox here in Slogger’s Roost has been busy ever since. The
overwhelming finding from the input is that there seem to be problems in
RBS that go way beyond pure technical snafu. I’ll start with two key
quotes from business suppliers:
“In the last couple of months, particularly with Ulster Bank, the
withholding of invoice payments has reached new depths. In one case, for
work done in February, we are still working through the, ‘failed to
raise a purchase order, raised an incorrect purchase order, missed some
information on the PO, wanted the invoice readdressed, can’t pay because
the payment system is down’. We are beginning to feel that this is
moving beyond incompetent administration to a deliberate policy of
holding back payments to suppliers. Won’t pay, or can’t pay. Neither are
good characteristics for a major bank.”
“I work for a niche supplier of marketing services to NatWest. They
have been at or near our insurance level of debt for months now, and the
excuses for non-payment get sillier day by day. Nobody was surprised
here when this ‘computer problem’ suddenly came up. In fact, our own
bank rang us to request a meeting about our cash situation once they
heard about the ‘glitch’. So if a rival bank has its suspicions, what
else are we to think but the worst?”
The Slog long ago fingered RBS Group as by far the most wobbly UK banking consortium, but last week’s development was
unexpected. What’s especially unusual in this case is that things are
clearly so desperate inside RBS, even small business and private
consumer problems were apparent before this ‘technical problem’ was
announced. Again, a spread of anecdotes….but with the emphasis on those
quotes showing IT expertise:
“We had trouble last week in that we were trying to fulfill a large
order for a customer. On Monday one of our suppliers called to say that
our account with them was on stop due to an unpaid invoice. On Friday
we had the same call from another supplier. A quick check of bankline
on Monday showed that I had paid the debt in full. However one of my
payments had not reached the supplier’s account. I also was certain
that I had paid the second supplier in full as well but couldn’t access
bankline until yesterday. The first supplier demanded payment if the
outstanding amount before they would release the order. Which means
we’re now out of pocket by £500. I first began to suspect that RBS/Nat
West might be having liquidity problems several months ago when for a
time our streamline payments were not being processed on time. Usually
they go into our account two days after they are taken from the customer
but for several weeks there seemed to be delays in the processing some
payments. We would only get part of what we were expecting.”
“I’m an Ulsterbank customer (for what little I keep in there) so all I
see is anecdotal. But this started early last week. I keep bugger all
in my account and usually just enough to cover a few bills etc. Because
of this the account sometimes goes overdrawn and I have an overdraft
that has always been in place, not much but about €700, then last week
this suddenly failed to work and caused a standing order to bounce. I
didn’t think too much of it but in the context of the last few days is
it pointing towards a bank with an acute cashflow problem?”
“A funny thing happened to me last Thursday at an RBS ATM in a suburb
of Manchester. It restricted withdrawals to £50 and only paid out in
old £5 notes.” (Several different versions of this one)
“I believe the curious and relevant events were RBS saying that they
had ‘debugged’ and technically sorted the problems yet ‘normal service’
would not be resumed for well over 48 hours. This smacks of total back
up failure or issues not related to the IT department.”
“As one previously involved in large corporate IT management, I can
confirm that any IT department worth its salt would always have a
roll-back position available and at least one ‘go/no-go’ check-point in
the upgrade process. Such changes are always implemented outside
prime-shift (overnight or weekends) to limit impact on concurrent
operations and to enable the roll-back if necessary.
If it was the RBS IT Department’s fault, then one IT Director will
surely be looking for a new job tomorrow – all bank’s IT folk are
generally pretty good at that routine operational stuff, so I share the
common view that there are other balls in play here.”
RBS yesterday said it would waive any overdraft fees or charges on
current accounts, and the taxpayer-owned banking group allowed customers
into 1200 NatWest, RBS and Ulster Bank branches across the UK and
Ireland on a Sunday for the first time. It is also set to extend opening
hours until 7pm on Monday to help them with enquiries and access to
cash. But none of this can explain why problems were apparent before the
‘glitch’ explanation was offered, and the massive coincidence of all
these events having immediately followed a major credit agency downgrade
of the Group.
What one can – and should – observe is that the cashflow savings
created for RBS by this uniquely insoluble techno problem vastly
outweigh anything it might offer the customer once the crisis has
passed. Take a look at these numbers:
Further, according to Reuters daily statements last week, RBS cash assets stood at £82bn, whereas net loans were recorded as £476bn.
But this might be the clincher: total deposits came in at
£476bn…exactly the same as loans. However, the difference between total
assets and total liabilities was around £60bn in the bank’s favour.
Given the amount of potential toxic write-off in the RBS group – and any
‘rush’ following a downgrade – it wouldn’t require much to change that
positive into a disturbing negative. With total fluid assets standing at
around £930bn, zero outgoings over five days of a ‘computer glitch’
would give the bank a £73bn windfall. More than enough to stave off a
crisis, and at least temporarily restore creditor confidence, if such
was needed. At the same time, of course, it physically barred the way to
a run on the bank.
I don’t think this is the end of the matter: it might even be the
start of some very nasty matter weeping from an infected wound. This
morning, for example, the Daily Telegraph’s main headline reports that the ‘glitch’ that was over will in fact continue for another two days at least.
Stay tuned.
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