In a report published today for the business secretary Vince Cable, Tomlinson makes clear that RBS routinely “distresses” otherwise profitable, stable and creditworthy businesses by “manufacturing defaults” in order to tip them into its recovery and restructuring division, GRG, and then to allow its West Register property arm to effectively steal their commercial property assets.
In a policy statement in May 2009
the bank said GRG/West Register had an “appetite” for particular
categories of property assets including “offices, retail and industrial
premises, pubs, hotels, nursing homes, car dealerships and hospitals”. Rather than do anything to address the blatant abuses that are still occurring daily in these divisions of the bank, RBS now led by chief executive Ross McEwan, today sought to kick the scandal further into the long grass by commissioning yet another report, this time from the ‘magic circle’ law firm Clifford Chance. The chances of them producing anything objective or forensic are pretty close to nil, I’d have thought. Oh, and Cable has referred the matter to the Financial Conduct Authority (chaired by ex KPMG chairman John Griffith-Jones) and Prudential Regulation Authority — a move which twitter friend Tony McKelvie said is a bit like referring Bernie Madoff to the neighbourhood watch.
Tweet: Tony McKelvie @TonyMcKelvie
@Ian_Fraser Reporting RBS to the FCA and PRA is tantamount to reporting Bernie Madoff to Neighbourhood Watch
I’d also like to know why MPs have been so utterly useless at doing anything to address this scandal. Speaking on Channel 4 News tonight, Jesse Norman, the Conservative MP for Hereford and South Herefordshire admitted that complaints from RBS’s SME and mid corporate “victims” have been “stuffing the inboxes” of all 650 MPs in Westminster for the past four years. It’s worth noting that, speaking during a House of Commons debate related to the astonishing case of RBS customer Derek Carlyle on March 10th, 2010, the Labour MP Jim Hood said:
“I ask the Minister to take all this information away. I do not say that he or the Government are responsible. When I came to this debate, I hoped that we were dealing with rogue managers and rogue directors at RBS, but from the interventions that I have taken — they were from Members from Northern Ireland and from many other parts of the country — I suspect that it is even more serious. It is not rogue people: it may be institutionalised. If so, it must be sorted; and we, as major shareholders in RBS, have a duty to sort it.”Norman kind of implied the MPs have largely ignored their the squeals of pain from their constituents. So have our MPs done their duty here?
The couple to whom Max refers — Eddie and Cheryl Warren — former owners of the Bold Hotel in Southport tell their story below:-
Our livelihood, our home, our marriage — all gone
By Heidi Blake and Jonathan CalvertPublished: The Sunday Times
Date: November 24 2013
WHEN Eddie Warren and his wife Cheryl took over the prestigious Bold hotel in Southport, their RBS manager was keen to boast to the local press how the bank’s loan had made the £3.7m purchase possible.
But four years later the bank forced the Warrens’ business into administration by withdrawing the lending it had been so keen to provide.
In the subsequent fire sale, the new owner became none other than the bank itself, when its property company West Register bought the hotel.
The bank snapped it up for the knockdown price of £1.4m, a year after independent valuers said the hotel was worth no less than £3.1m.
Since the proceeds of the sale were insufficient to cover the Warrens’ £2.5m debt to the bank, they have lost everything.
Last week Warren said he was bewildered as to how his hotel business, which had a healthy turnover, could have dropped by almost two-thirds in value when West Register took it into its extensive property empire. “They stole it. Even if the property market was depressed it would be worth £3m,” he said.
The Warrens bought the hotel in 2007 using £1.2m of their money from the sale of their nursing home business. A condition of the loan was that they had to take out an interest rate swap because the bank said this would protect them when base rates rose.
This was poor advice. They ended up paying a high fixed interest on their loans as base rates tumbled. Even worse, a peculiarity of some swaps is that the borrower pays penalties when interest rates fall. This added an extra £120,000 a year to their bill.
Since it would have cost the Warrens £575,000 to buy out of the swap, the bank added this figure to the loan. Its internal calculations now suggested the Warrens owed more than £3m at a time when property prices were falling. The Warrens never missed a loan payment, but the new calculations meant the bank could say they were in breach of their covenant because the value of the business was close to the amount borrowed.
The business was put into the bank’s Global Restructuring Group, where it was hit with higher charges. In July 2011, the bank valued the hotel and slashed its worth to £1.8m even though an independent report had valued the business at £3.1m the previous year.
The new lower valuation meant the business was worth far less than the loan. The business went into administration in autumn 2011 and was bought by West Register for £1.4m a couple of months later. The hotel is still owned by West Register and the bank says it will at best break even when it is sold.
Warren believes the hotel will soon be worth £4m again in a rising market — a substantial profit for the bank. He and his wife have lost £1.2m, their livelihood, their home and are now divorcing.
Source
Additional:
No comments:
Post a Comment