SENECA BANKING CONSULTANTS 1 BUSINESSES AFFECTED BY RBS’S GLOBAL RESTRUCTURING GROUP (GRG) W W W . S E N E C A B A N K I N G . C O . U K
SENECA BANKING CONSULTANTS SENECA BANKING CONSULTANTS 2 2 The introduction of the Complaints Review scheme is just the tip of the iceberg. Having assisted customers of GRG for over 4 years, this should be the fjrst of many steps that RBS should take to compensate those who have been affected. Daniel Fallows Director
SENECA BANKING CONSULTANTS SENECA BANKING CONSULTANTS 3 3 TABLE OF CONTENTS 04 Timeline of key GRG events 06 What is GRG? 07 What is West Register or a Property Participation Fee Agreement? 07 How do I know if I was correctly placed into GRG? 08 How do I know if I’ve been mistreated in GRG? 09 Why shouldn’t I wait and see what happens in the RBS review? 10 Can I still claim if my company has gone into administration or is dissolved? 11 How much can I claim? 12 How long will it take? 12 Who will be handling my claim? 13 What if I receive a redress ofger that is not fair and reasonable? 14 Will I need to go to Court/enter into Litigation? 15 Does it matter if I leave it a few months until I re-fjnance? 15 What does it mean if my claim is time-barred or outside of limitation? 16 I entered into the GRG years ago can I still claim? 17 About Us 18 Seneca Banking Team 19 Is Seneca Banking a Law Firm? Will you claim for my consequential losses e.g loss of property, loss of busi- 19 ness opportunity and loss of reputation? 20 How successful have you been?
SENECA BANKING CONSULTANTS SENECA BANKING CONSULTANTS 4 4 Timeline of key GRG scandal events £ November 2013 Royal Bank of Scotland (RBS) undergoes an independent skilled person review of its lending practices, following allegations that the Bank January 2014 intentionally put down good and viable £ businesses, in the interest of boosting Tomlinson released a report in January the Bank’s profjts. 2014 which claimed that RBS profjted heavily from struggling businesses by Lawrence Tomlinson, an independent April 2014 placing them into RBS’s “turnaround businessman who owns the division” — the GRG unit. He included construction and healthcare group real life case studies of businesses LNT Group, was asked by the then In April 2014, RBS responded by calling that claimed they were purposely UK Business Secretary Vince Cable in the law fjrm Clifford Chance to do an engineered into default by the Bank. to investigate problems small- and “independent review” of the Tomlinson medium-sized businesses were having Report and the treatment of businesses It became apparent that RBS was able with the Bank in relation to GRG. within GRG. to increase revenue by charging higher Cable instructed two consultancies, fees and margins for the struggling Promontory and Mazars, to produce a businesses in GRG and this, in turn, report in relation to the GRG unit in would allow the Bank’s property/equity RBS, on behalf of the Financial acquisition division, West Register, to Conduct Authority. purchase devalued assets, with the sole intention of generating signifjcant fee income for the Bank, to the detriment of its customers. The FCA appointed Promontory and Mazars.
SENECA BANKING CONSULTANTS SENECA BANKING CONSULTANTS 5 5 GRG scandal events August 2014 July 2014 October 2016 RBS shut down the GRG unit, and in January 2015, In July 2014, Andrew Tyrie, the Chris Sullivan left the Bank. The FCA received the chairman of the Treasury Select fjnal report from the Committee criticised RBS for being skilled person. “willfully obtuse” and delivering a November 2016 “belated U-turn” when the panel GRG documents leaked grilled RBS executives over the “project dash for cash”. RBS announce Complaints GRG unit. Review scheme for those affected by GRG. RBS Deputy Chief Executive Chris Sullivan and GRG boss Derek Sach sent a letter of apology to the TSC panel for misleading statements made. “It now appears that RBS has been wilfully obtuse with the committee. If this is how RBS deals with a parliamentary committee, can customers and regulators rely on it to be straightforward with them?” said Andrew Tyrie at the time.
SENECA BANKING CONSULTANTS SENECA BANKING CONSULTANTS 6 Key Points 16,000 companies were allegedly pushed into the GRG unit after the onset of the financial and banking crisis of 2008. Below are key facts uncovered in the BBC/Buzzfeed leaks which relate to the vast size of the GRG: £1.2 Billion £3+ Billion £65 Billion 2704 GRG’s profits in a assets and equity acquired value of firms it property stakes taken single year from customers controlled from customers What is GRG? The Global Restructuring Group (GRG) was RBS/Natwest’s turnaround division. Many business banking customers of RBS and Natwest were informed they were “over-geared” or underperforming, and as such were transferred to the GRG. In the vast majority of cases, GRG was used to secure as much return for the Bank as possible, regardless of whether the business was performing well or not. Aggressive restructuring, lack of transparency around fees and debt for equity swaps known as PPFAs are just some of the ways businesses were affected by GRG.
SENECA BANKING CONSULTANTS SENECA BANKING CONSULTANTS 7 7 What is West Register or a Property Participation Fee Agreement (PPFA)? West Register is the division of the Bank which was responsible for buying and managing the assets of companies within GRG, including property and equity stakes. In April of 2014 it was reported that West Register was to be wound up in response to the claims against GRG. Property Participation Fee Agreements (PPFA) were imposed by RBS and allowed the Bank to secure large participation in the value of customers’ assets. A business would usually be offered a new loan, with extortionate and often complex fee structures. How do I know if I was correctly placed into GRG? There is no prescribed test as to which business and situations would trigger the transfer of a business into GRG. The unit was initially set up to help struggling businesses, however, successful and well run businesses were often put into GRG, as the Bank saw an opportunity to secure as much capital for themselves as possible.
SENECA BANKING CONSULTANTS 8 How do I know if I’ve been mistreated in GRG? Common indications of mistreatment would include: • Not knowing why you are suddenly being managed by GRG; • Payment of GRG management fees; • Complex and aggressive restructuring of facilities; • Bank insisting you pay an external accountancy firm to do an IBR (Independent Business Review); • Forced sale of assets at a discount ; • PPFAs being insisted by the Bank; and • Any involvement with West Register.
SENECA BANKING CONSULTANTS SENECA BANKING CONSULTANTS 9 9 Why shouldn’t I wait and see what happens in the RBS review? Experience of the interest rate hedging product (‘IRHP’) review scheme sadly demonstrates that the interests of claimants may not be safeguarded by a compensation scheme operated and managed by the Bank itself. Similarly, there are concerns as to whether a GRG scheme will lead to proper and fair redress. Typically, the Bank’s review scheme can be a slow process and it is important that you appoint a party like Seneca who will be in continuous contact with the Bank to ensure your complaint is being processed through the review as quickly as possible. In order to place your business into the best possible position within any compensation scheme and also to protect against the potential of being time-barred in future potential litigation (the “limitation” issue), we would recommend that businesses involve experienced and specialist advisers at the earliest point possible. Seneca Banking can provide valuable assistance in presenting claims and organising expert reports on the following issues: The legitimacy of entry into the GRG; The appropriateness of additional fees, charges, interest and penalties whilst with the GRG; The effect of entry into the GRG and the imposition of fees etc on liquidity and credit status; Consequential losses, including under-value asset sales or transfers, loss of profit, loss of favourable invoice and credit terms; and Framing the complaint into a legally recognisable and persuasive package. The Complaints Review scheme will not be straightforward and will involve complex and fact specific issues. The early assistance of experienced professionals is highly recommended.
SENECA BANKING CONSULTANTS SENECA BANKING CONSULTANTS 10 10 Can I still claim if my company has gone into administration or is dissolved? Entering into administration or having a company dissolved with an outstanding GRG claim is not straightforward and can be very onerous. You may not know whether or not you should or can pursue a claim. Seneca has experience both in working with clients who are in administration and also with working alongside administrators. Seneca will advocate for your claim to be pursued under the Review and for the FCA to take a more pro-active role in ensuring that claims from companies in administration are heard. If your company has been dissolved you can still make a claim if you qualify as an Interested Party such as a shareholder, former director, administrator or liquidator, or a major creditor. Seneca will provide the guidance which you can take to pursue the claim and also to reinstate the company so that the money offered may be recovered.
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