Monday, November 25, 2013

The Banksters Again

RBS put some "good and viable" businesses into default so it could make more profit, it is claimed in a report by government adviser Lawrence Tomlinson.

The allegations centre on the bank's Global Restructuring Group (GRG) lending division, which specialises in handling loans seen as being more risky. The report will say that putting a business into the GRG generates revenue for the bank through fees, increased profit margins and the purchase of devalued assets by their property division, West Register.  Tomlinson told the BBC that there is a perception among small businesses that they are being "purposefully distressed" in order to get them into the GRG.

 A two-month investigation by the Sunday Times,  claims to have uncovered evidence of a "hit squad" within RBS that has driven businesses into financial difficulty through punitive fees and charges and then scooped up their property assets at rock-bottom prices. The Sunday Times claims that RBS withdrew finance for many small businesses that had not missed loan repayments and were trading through the recession.

The GRG unit is understood to have the power to scrap loan deals, impose inflated interest rates and charge hefty penalties.

Tomlinson told the Sunday Times: "There is a wealth of evidence which suggests that RBS has forced healthy, vibrant businesses into financial trouble and… seized their assets to benefit its own vast property empire."

"I feel really sick sometimes. It is really disturbing," he said. "It is ruining people's businesses for sure, and in some cases having a huge impact on their personal lives too, even leading to family breakdown."

Business Secretary Vince Cable has referred the report to City regulators. "Some of these allegations are very serious and I am waiting for an urgent response as to what actions have been taken.”

The shadow business secretary, Chuka Umunna, said: "The claims made by Lawrence Tomlinson against RBS' Global Restructuring Group are extremely serious indeed. "To artificially distress otherwise successful businesses in order to seize their assets and profit would be utterly scandalous and deplorable.

Another report already published by Sir Andrew Large, a former deputy governor of the Bank of England, said it had failed to lend to small and medium-sized businesses. He also ordered the bank to set up an enquiry into the way it had handled businesses facing difficulties and distress.The chancellor, George Osborne, described the report as "pretty shocking" and that "RBS was a lousy lender to small businesses," he told the BBC.

Now we know why and it cannot all be blamed on some cocaine-fueled bank chief.

Meanwhile, another bank chief executive, David Thorburn of the Clydesdale, was awarded a total of £1.5 million in salary and bonuses for the year to 30 September, up from £510,000 the previous year. In September, it had to apologise to thousands of customers after a blunder over changes to their mortgage payments. The error led to an £8.9m fine from the Financial Conduct Authority also had to set aside an extra £130m for payment protection insurance mis-selling, taking its provision to £386m.

The other casualties of the banks will be its low-paid front-line staff losing their jobs through branch closures at RBS and Clydesdale who daily face the wrath of customers while the back-room executives pick up bonuses for robbery.  

No comments: