5 ms·

Leaked Files Reveal Royal Bank of Scotland Harmed British Small Businesses

86 points by samsolomon 10y ago

Lio 10y ago
I'd like to see both the RBS executives responsible for this and Clifford Chance, the legal firm RBS called in to do an "independent review" sanctioned in some meaningful way. 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.
- arethuza 10y ago
  The idea that a large law firm could do an "independent review" is a bit bizarre - if they didn't already have some part of RBS as a client they'd be keen to get RBS as a client after they delivered a whitewash.
  - vidarh 10y ago
    And in fact, they had parts of RBS as clients both before and after. 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_chance_adviseswestregisterprimenorderstedtonthesaleofhe.html https://www.cliffordchance.com/news/news/2012/11/clifford_ch... [2] https://www.cliffordchance.com/news/news/2015/09/clifford-chance-advises-rbs-on-the-sale-of-paderborn-libori-gale.html https://www.cliffordchance.com/news/news/2015/09/clifford-ch...
- Scirra_Tom 10y ago
  Oh Clifford Chance. They facilitated a competitor sending us groundless* cease and desists which caused a great deal of anxiety. Guess I'm not surprised to see them rubbing shoulders with my favourite bank RBS. 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.
  - vidarh 10y ago
    For future reference (or for others..): If you really can't pay in the UK, set out your expenses and income clearly in a letter, demonstrating that you've taken reasonable step to limit your spending, address it to all your creditors, and ask for interest to be frozen and offer what you believe you can afford (proportional to debt) to pay to each creditor on weekly or monthly basis. If they refuse, then pursue a debt management plan. 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.
akie 10y ago
Can we please put people in jail for stuff like this? Please? Just once?
- Shivetya 10y ago
  government owned bank, if it works the same over there as in the US (fannie mae/mac here come to mind) I doubt there is much that can be done but use taxpayer money to make people whole again. 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?
  - pidg 10y ago
    It's a slightly different situation to Fannie May, in that RBS was a privately-owned business, and only became government-owned because it ran into so many problems. It's not a 'government institution' as the Bank of England is - the government just took control to stop it collapsing.
    - deleted 10y ago
      [deleted]
- bboreham 10y ago
  Instances of bankers being jailed: http://www.reuters.com/article/us-libor-hayes-appeal-idUSKCN0WA1CK http://www.reuters.com/article/us-libor-hayes-appeal-idUSKCN... http://uk.reuters.com/article/uk-barclays-libor-trial-idUKKCN0ZN1G6 http://uk.reuters.com/article/uk-barclays-libor-trial-idUKKC...
retube 10y ago
Absolutely unconscionable, literally extortion. The individuals involved need to be held to account.
- deleted 10y ago
  [deleted]
Veen 10y ago
I've recently been binging Sopranos. Last night I watched the season two episode in which an old friend of Tony's who owned a sporting goods store borrowed money from Tony. 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.
raverbashing 10y ago
Off topic: Interesting to see how Buzzfeed is moving into the News segment (and will be probably dislodge some entrenched participants) I've noticed the trend before, but I suspect this is the first time they broke some major news
- piva00 10y ago
  They have been doing this for a while now, I already got used to see their long-form pieces and I can say that every time there is a comment identical to yours.
jacquesm 10y ago
In nl we had the 'NMB' (since merged with the postbank to become ING), which was the abbreviation of 'Nederlandse Middenstands Bank' (Dutch Bank for small and medium Businesses). 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.
- retube 10y ago
  I don't understand how it is legal / allowable for a bank just to call in a loan (unless the call option is explicitly documented and paid for by the originator / issuer). 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.
  - anexprogrammer 10y ago
    It's not uncommon for businesses to have overdrafts in place of or additional to loans for cashflow. 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.
    - amorphid 10y ago
      Depending on a line of credit to fund your business' operations definitely makes you the bank's biyotch. I remember Zappos being encourages/forced to sell for the same reason [1]. Their outcome had a happier ending, but they still had to sell. [1] http://www.inc.com/magazine/20100601/why-i-sold-zappos.html http://www.inc.com/magazine/20100601/why-i-sold-zappos.html
objectiveariel 10y ago
What a scoop! Banks engage in unethical business practices? But I thought they were charitable institutions, for heaven's sake. It's not like their greed has ever caused a global financial crisis.
- candiodari 10y ago
  Banks' greed ... not so much. Government pushing banks to do this ... yes. As documented in this case. Think about it: for a bank to risk stuff like this without assurances that the government will be behind it when there is pushback ... 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.
- iamben 10y ago
  What's the line?! - "Give a man a gun, he'll rob a bank. Give a man a bank, he'll rob the world." Off topic, but does anyone know the (pre Mr. Robot) origin of that?
chillydawg 10y ago
Bank gives loan, debtor can't pay, bank seizes assets? 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?
- snovv_crash 10y ago
  You missed the 'bank calls in entire loan when they think the business is least capable of coming up with money at short notice, eg after major equipment expenditure.'
anexprogrammer 10y ago
It's not like this is an novel development. Banks were doing this in the early 90s recession. Little or nothing was done, and Gordon further relaxed banking regulation after the '97 election.
logronoide 10y ago
Extorsion is a great business model.
lifty 10y ago
No wonder why people are voting with the Trumps and Farages of the world. Natural self correcting behaviour in an entrenched and corrupt system. When so many institutions and people are behaving in this manner there must be some kind of correction.
scandox 10y ago
Private Eye magazine was covering cases like these when they were actually happening...3 or more years ago. The targeting they described was frightening. Ome case of a successful business forcibly sold to associates of advisors connected to the bank.

86 points by samsolomon 10y ago

Lio 10y ago

I'd like to see both the RBS executives responsible for this and Clifford Chance, the legal firm RBS called in to do an "independent review" sanctioned in some meaningful way. 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.

arethuza 10y ago
The idea that a large law firm could do an "independent review" is a bit bizarre - if they didn't already have some part of RBS as a client they'd be keen to get RBS as a client after they delivered a whitewash.
- vidarh 10y ago
  And in fact, they had parts of RBS as clients both before and after. 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_chance_adviseswestregisterprimenorderstedtonthesaleofhe.html https://www.cliffordchance.com/news/news/2012/11/clifford_ch... [2] https://www.cliffordchance.com/news/news/2015/09/clifford-chance-advises-rbs-on-the-sale-of-paderborn-libori-gale.html https://www.cliffordchance.com/news/news/2015/09/clifford-ch...
Scirra_Tom 10y ago
Oh Clifford Chance. They facilitated a competitor sending us groundless* cease and desists which caused a great deal of anxiety. Guess I'm not surprised to see them rubbing shoulders with my favourite bank RBS. 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.
- vidarh 10y ago
  For future reference (or for others..): If you really can't pay in the UK, set out your expenses and income clearly in a letter, demonstrating that you've taken reasonable step to limit your spending, address it to all your creditors, and ask for interest to be frozen and offer what you believe you can afford (proportional to debt) to pay to each creditor on weekly or monthly basis. If they refuse, then pursue a debt management plan. 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.

akie 10y ago

Can we please put people in jail for stuff like this? Please? Just once?

Shivetya 10y ago
government owned bank, if it works the same over there as in the US (fannie mae/mac here come to mind) I doubt there is much that can be done but use taxpayer money to make people whole again. 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?
- pidg 10y ago
  It's a slightly different situation to Fannie May, in that RBS was a privately-owned business, and only became government-owned because it ran into so many problems. It's not a 'government institution' as the Bank of England is - the government just took control to stop it collapsing.
  - deleted 10y ago
    [deleted]
bboreham 10y ago
Instances of bankers being jailed: http://www.reuters.com/article/us-libor-hayes-appeal-idUSKCN0WA1CK http://www.reuters.com/article/us-libor-hayes-appeal-idUSKCN... http://uk.reuters.com/article/uk-barclays-libor-trial-idUKKCN0ZN1G6 http://uk.reuters.com/article/uk-barclays-libor-trial-idUKKC...

retube 10y ago

Absolutely unconscionable, literally extortion. The individuals involved need to be held to account.

deleted 10y ago
[deleted]

Veen 10y ago

I've recently been binging Sopranos. Last night I watched the season two episode in which an old friend of Tony's who owned a sporting goods store borrowed money from Tony. 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.

raverbashing 10y ago

Off topic: Interesting to see how Buzzfeed is moving into the News segment (and will be probably dislodge some entrenched participants) I've noticed the trend before, but I suspect this is the first time they broke some major news

piva00 10y ago
They have been doing this for a while now, I already got used to see their long-form pieces and I can say that every time there is a comment identical to yours.

jacquesm 10y ago

In nl we had the 'NMB' (since merged with the postbank to become ING), which was the abbreviation of 'Nederlandse Middenstands Bank' (Dutch Bank for small and medium Businesses). 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.

retube 10y ago
I don't understand how it is legal / allowable for a bank just to call in a loan (unless the call option is explicitly documented and paid for by the originator / issuer). 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.
- anexprogrammer 10y ago
  It's not uncommon for businesses to have overdrafts in place of or additional to loans for cashflow. 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.
  - amorphid 10y ago
    Depending on a line of credit to fund your business' operations definitely makes you the bank's biyotch. I remember Zappos being encourages/forced to sell for the same reason [1]. Their outcome had a happier ending, but they still had to sell. [1] http://www.inc.com/magazine/20100601/why-i-sold-zappos.html http://www.inc.com/magazine/20100601/why-i-sold-zappos.html

objectiveariel 10y ago

What a scoop! Banks engage in unethical business practices? But I thought they were charitable institutions, for heaven's sake. It's not like their greed has ever caused a global financial crisis.

candiodari 10y ago
Banks' greed ... not so much. Government pushing banks to do this ... yes. As documented in this case. Think about it: for a bank to risk stuff like this without assurances that the government will be behind it when there is pushback ... 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.
iamben 10y ago
What's the line?! - "Give a man a gun, he'll rob a bank. Give a man a bank, he'll rob the world." Off topic, but does anyone know the (pre Mr. Robot) origin of that?

chillydawg 10y ago

Bank gives loan, debtor can't pay, bank seizes assets? 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?

snovv_crash 10y ago
You missed the 'bank calls in entire loan when they think the business is least capable of coming up with money at short notice, eg after major equipment expenditure.'

anexprogrammer 10y ago

It's not like this is an novel development. Banks were doing this in the early 90s recession. Little or nothing was done, and Gordon further relaxed banking regulation after the '97 election.

logronoide 10y ago

Extorsion is a great business model.

lifty 10y ago

No wonder why people are voting with the Trumps and Farages of the world. Natural self correcting behaviour in an entrenched and corrupt system. When so many institutions and people are behaving in this manner there must be some kind of correction.

scandox 10y ago

Private Eye magazine was covering cases like these when they were actually happening...3 or more years ago. The targeting they described was frightening. Ome case of a successful business forcibly sold to associates of advisors connected to the bank.