Leaked Files Reveal Royal Bank of Scotland Harmed British Small Businesses
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Their independent review was clearly a sham even down to the point that RBS denied to MPs that their Global Restructuring Group was being run as a profit centre for the bank. Something we now know was the deliberate intention from the top of the bank down.
As someone running a small business the idea that a bank could deliberately try to destroy its customer's profitable businesses in order to seize their assets at a knocked down rate is terrifying and should be treated as criminal matter.
Clifford Chance is not just any large lawfirm - they're persistently amongst the top ten lawfirms in the world by revenue, and one of the firms making up the UK "magic circle" lawfirms (at least 3 of the others of which are also amongst the top ten in the world).
They'd bend over backwards for a bank the size of RBS, as they are a big enough behemoth that their revenue would slide very quickly if they showed any kind of spine when it came to standing up to customers that size - it's not like they could easily replace lost revenue from a client like RBS from smaller clients.
It's a problem with companies like that (both RBS and Clifford Chance) - RBS isn't just too big to fail for the UK, it's too big for a lawfirm as bloated as Clifford Chance to afford to risk their relationship with.
EDIT: In fact, not only is RBS a Clifford Chance client, but specifically the property arm of RBS (West Register) that is one of th divisions implicated in this, has used Clifford Chance. As you can see from Clifford Chance's own website [1] [2].
[1] https://www.cliffordchance.com/news/news/2012/11/clifford_ch...
[2] https://www.cliffordchance.com/news/news/2015/09/clifford-ch...
RBS ran a great scam when I was at University, free 3 year railcards for signing up a student account. No one I knew ended up getting one unless they complained.
I forgot about it, and complained 6-12 months later and asked for a 2 year railcard. They denied, and basically said I shouldn't be so entitled and that the bank are doing students a favour and that I should of complained earlier.
RBS is also a bank I phoned up in tears because I couldn't manage my credit card debt when I was younger and in a bad time in my life. Was offered zero breaks. I expressed commitment to repaying the debt, but needed a couple of months breathing space on the repayments. Nope, not an option.
They are one of the shittiest banks in the world, and I'm always more than happy to tell people my experiences of them when they pop up in conversation.
* This is my opinion of the letter. Guess I have to make that explicit in this context.
Most creditors in the UK will play hardball if you talk to first line staff, but will act more reasonable if you demonstrate that you have done your homework in determining what you can actually afford to pay, partly as that implies that you likely is also aware of alternatives like a debt management plan or IVA (Individual Voluntary Arrangement), or ultimately bankruptcy, which may leave them without full repayment.
With the general public they were known as the 'Nederlandse Meeneem Bank' (Dutch takeaway bank) because one of their strategies was to suddenly ask for the whole principal back in one go (something very few businesses can afford, and as your bank they'll know exactly when you can and when you can't) and if you didn't pay up immediately they'd buy up your assets in the bankruptcy proceedings that would immediately follow.
After selling off enough of the assets to satisfy the principal they'd sell off the remainder to friendly parties in order to make an easy profit.
Very nasty practice.
Don't ever put yourself in a position where you are dependent on a single bank, if you need an 'x' amount try to split 'x' across multiple loan providers if you can (it's not always possible, for instance with mortgages).
For a business to have only a single banking relationship is an un-necessary risk.
If a loan is being serviced then it shouldn't be possible for a bank just to randomly demand repayment, jack up the interest rate, or otherwise change the terms of the loan. That seems grossly unfair.
If this is the standard in the UK, then I think we need legislation.
The bank calls in the overdraft because of the bank's bottom line, rather than for anything related to the business itself or change in profitability. Was quite common in both the 08 and 91 recessions.
[1] http://www.inc.com/magazine/20100601/why-i-sold-zappos.html
If you owe your bank a million, you have a problem. If you owe your bank a billion, it has.
(Kenyes?)
The essence is that you have to be big enough and have borrowed enough so that the credit losses hurts the bank if they turn on you... But I doubt it's a winning strategy for a small family business.
When the shop owner couldn't pay back the principle, Tony applied massive interest rates and "fines", and when the guy couldn't pay those, took over his business, using it to order stock that the business couldn't pay for — eventually forcing it into bankruptcy.
As Tony is fond of saying, there's really not much difference between the mob loan sharks and "legitimate" banks, except that the banks have the law on their side so there's less need for knee-cappings and the like.
the options versus private entities are much more varied compared to what can be done to a government institution. Sovereign immunity is a means that even horribly negative effects of policy or work can be shielded from restitution. Does that exist in European countries too?
http://www.reuters.com/article/us-libor-hayes-appeal-idUSKCN... http://uk.reuters.com/article/uk-barclays-libor-trial-idUKKC...
The targeting they described was frightening. Ome case of a successful business forcibly sold to associates of advisors connected to the bank.
It's not like their greed has ever caused a global financial crisis.
Besides, if you know economics even a little bit you know that there are 2 sets of accounting rules : one for banks, one for everyone else. No bank can satisfy the normal rules for solvency, so they simply don't apply to them. Banks can't exist without government backing, even in individual cases of small banks.
Yes this is the banks' doing. But ... the government is not the solution, sadly.
Off topic, but does anyone know the (pre Mr. Robot) origin of that?
I've noticed the trend before, but I suspect this is the first time they broke some major news
OK so the internal incentives and transfer for assets to their property investment wing were set up to make this process probably too aggressive, but fundamentally it's sound, surely?