December 7th, 2013
A former insider at Royal Bank of Scotland’s Irish subsidiary, Ulster Bank, has shed further light on the alleged systematic abuse of business customers by the bank’s “recovery and restructuring” arm, which includes Global Restructuring Group and West Register.
In a candid interview with Ireland’s Sunday Independent the whistleblower – who is reported to have met Lawrence Tomlinson, the author of a recent damning report about Royal Bank of Scotland in August and galvanised the Leeds-based entrepreneur into investigating the scandal – said the practices he saw first hand in the bank’s Irish arm are even egregious than those detailed in the Tomlinson Report.
“I saw good businesses being driven to extinction and some others which just about survived the Ulster Bank work-out. Basically, if Ulster Bank saw an opportunity to enforce a default which it could profit from, it did it.
“The bank put a business into a special unit [Global Restructuring Group]. A business would be moved along to another section of the bank and overnight all the credit terms would be changed. For example, one businessman with large assets and good profits was told he was on a work-out. The loans were transferred and a charge placed on the move. The charge could be anything from €10,000 to €50,000 per month and the money had to be paid weekly. Other fees and charges were added as time went on.
“Eventually, the business runs out of cash, the assets are seized and sold on and all the money went on the Ulster Bank bottom line. I have to stress that there was no default even likely in many cases. It was simply outrageous what went on.”
The whistleblower indicated Ulster Bank probably duped businesses when setting out loan agreements.
“A ‘repayable on demand’ clause was inserted into commercial loans. I saw good businesses being driven to extinction and some others just about survived the Ulster Bank work-out. These were never properly explained to the customer but what it meant was that Ulster Bank could literally demand payment of an entire loan overnight.
“No matter how big you are, very few businesses can pay a multi-million-euro loan overnight. But that’s what Ulster Bank did. It didn’t always win. In some cases, business owners took legal action and successfully prevented their businesses from going under but that was rare.”
The whistleblower decided to contact Tomlinson and spoke out last in last Sunday’s Sunday Independent in the hope of halting the practices at Ulster Bank.
“Mr Tomlinson’s report looked at Britain and it is a damning report of RBS, but my own experience inside Ulster Bank tells me the practices here in Ireland were even worse. People lost everything. Of course, in a recession businesses do go under. But there were so many that I know about which should never have been in the firing line.”
The whistleblower urged the Irish government of to appoint someone like Lawrence Tomlinson to examine how the “recovery and restructuring” arms of all Irish banks have been behaving. “We need someone like him who can go directly to business people in the Republic and report back to the Government.”
The whistleblower’s claims and the entire Tomlinson Report should be read in conjunction with an article published yesterday in the Spectator. In this, Keith Carter, former chief executive of Allergy Therapeutics, describes RBS’s shocking treatment of the Worthing, East Sussex-based AIM-listed company.
“For years they have been our main financial partner, but now, dealing with RBS feels like fighting a highly trained army skilful in psychological warfare: the removal of certainties and their replacement with threats, the opaque meanings, the unexplained substitutions of staff — new people well-versed in the dark arts of insolvency, covenants and barrack-room law; the warrior trolls of Orwellian ‘corporate recovery’.
“As things unfold I will be amazed at our durability, our ability to meet the challenges RBS has created. I have already been introduced to the sharp-suited team from PWC who will conduct, at our expense, an ‘Independent Review’ of our business; they were cosily sitting in wait with the new RBS team when we were summoned to be informed of our trumped-up misdemeanour. The expense will be great: some of these experts are to be charged to us at £600 per valueless hour as they tap us for the knowledge that will reappear, beautifully presented, in a report to RBS that we will never be allowed to see in full.
“Our role will increasingly become simply that of the payer of costs arising from this never-declared but always threatened claim of breach. Our poor little company will stretch every sinew. Development plans will be shelved, staff training postponed, marketing costs trimmed, muscle cut along with the paltry fat. Short-term cash will become our only focus. [RBS global restructuring group manager] Richard’s bonus depends upon it, I’m sure, and so do those of his many friends who crowd around our struggling little company — a rare British innovator, manufacturer, exporter, employer. An appeal to Ms Eagle, then Secretary to the Treasury, goes unacknowledged.
The Sunday Independent asked the bank’s Dublin headquarters if it would welcome an investigation into allegations that it is “purposefully distressing” business customer for profiteering purposes in the Republic of Ireland. In an email sent in error to the newspaper , Ulster Bank media relations manager John Holohan asked his boss Pauline Dooley: “Re: below. Is there a prepared statement for any similar media queries?” The bank issued the following statement:
“In Northern Ireland, we were the first local bank to join the Bank of England’s Funding for Lending Scheme in September and we have already agreed over £100m in new lending to more than 800 companies under the scheme. In the Republic of Ireland, we provide significant support and financial resources to the sector, including the provision of over 4,000 start-up packages to customers in 2012. We place considerable importance on business and Ulster Bank is committed to doing everything it can to support the economy and businesses. We will continue to provide affordable finance to support business development and job creation.”