Leaked docs reignite RBS asset stripping scandal

New secret documents have emerged that seemingly expose still 73 per cent taxpayer-owned bank Royal Bank of Scotland methods of intentionally driving struggling businesses to the wall in order to cash-in on their assets.

It was reported in August that RBS is already facing legal action over what has now become its notorious Global Restructuring Group (GRG).

Small businesses have launched a £1 billion legal case against the Edinburgh-based bank claiming they were destroyed and asset-stripped by the GRG unit that was supposed to help and assist them.

The 140 companies signed up to the action say they were pushed into administration by RBS’s global restructuring group so the bank could use their assets to pay down its debts.

Now, BBC Newsnight and BuzzFeed News have revealed that they have been handed documents that show the bank’s policy, known internally at RBS as ‘dash for cash’, meant that staff could enhance their bonuses by seemingly appearing to help firms in debt but working behind the scenes to grab their assets on the cheap and push them further into trouble.

In 2013, a report by Government-backed entrepreneur Lawrence Tomlinson argued that executives at many companies were ‘forced to stand by and watch an otherwise-successful business be sunk by the decisions of the bank’.

That same year, the Financial Conduct Authority was ordered by then Business Secretary Vince Cable to conduct a so-called “skilled persons report” into Mr Tomlinson’s allegations.

The report, carried out by two firms of consultants, Mazar’s and Promontory, has since been completed and its findings passed to the City regulator, but FCA chief executive Andrew Bailey has refused to name a date of publication.

RBS itself commissioned the law firm, Clifford Chance, to report on Mr Tomlinson’s allegations which reported in 2014 that it had found no evidence to support most of his accusations.

However, while RBS has always denied the allegations, today’s revelations would appear to suggest the claims against the bailed-out lender could yet prove to be true.

According to the BBC and BuzzFeed reports, the documents show the bank’s efforts to make money out of struggling businesses were focussed on after the 2008 financial crisis when RBS had to be rescued by a massive £45 billion taxpayer bailout.

A division was set up to be called Global Restructuring Group (GRG) which was designed to turnaround struggling firms. It put some 12,000 of its customers in the division which was not negotiable. They then began restructuring their loans and ramping-up the interest.

The leaked file even shows that where companies survived and kept up with payments staff were encouraged to find a way to provoke a default.

The resulting weight of debt has destroyed companies and reportedly broken homes, destroyed families and affected the health of customers.

The bank told Newsnight: “RBS has been very clear that GRG’s role was to protect the bank’s position… In the aftermath of the financial crisis we did not always meet our own high standards and we let some of our SME customers down.

“Since that time, RBS has become a different bank and significant structural and cultural changes have been put in place, including how we deal with customers in financial distress.”