More than 250 companies claiming to have been damaged or destroyed by Royal Bank of Scotland’s “turnaround” division have clubbed together to sue the state-owned lender.
The companies, mainly small and medium sized, allege that RBS placed them under the control of its Global Restructuring Group not to help them, but to send them to the wall so that RBS could grab their assets on the cheap.
The RBS GRG Business Action Group is seeking compensation. It has instructed Enyo Law, the City firm, and retained Lord Pannick, QC, and Andrew Hunter, QC, to make its case. They intend to run an “unlawful means conspiracy action” against RBS and some of its most senior figures.
The individuals are Sir Philip Hampton, RBS’s recently departed chairman; Chris Sullivan, the former deputy chief executive, who left the bank at the end of last year; Derek Sach, the head of GRG; and Aubrey Adams, the former Savills chief executive who is head of property for RBS. Mr Adams was responsible for West Register, a subsidiary that bought distressed property assets from customers. He and Mr Sach are scheduled to leave RBS at the end of this month.
Treble B Tyre Services is among RBS customers to join the action group. The family business, based in Caterham, Surrey, was founded in 1970. Its turnover exceeded £6.5 million and the business employed more than 50 people selling tyres in nine sites across the southeast of England and Wales.
The company had loan agreements with RBS “to cover cashflow fluctuations” as well as “long-established property-based loans” on which no payments were missed. In 2011, the bank placed it under GRG, as Peter Burgess, Treble B’s managing director, started to sell some of the business as a prelude to retirement, before passing the core of Treble B on to his son.
Mr Burgess said: “When I sold part of the business, the bank took the proceeds of the sale and reduced our overdraft facility . . . I thought this was just done to me and didn’t understand why. But I wasn’t the only one.”
Last summer RBS was lambasted for misleading MPs over GRG. Mr Sullivan, the bank’s deputy chief executive at the time, had told the committee that the GRG was “absolutely not a profit centre” and that describing it as such would be “totally inappropriate”. Later, RBS admitted that the description was accurate after all.
The activities of GRG, which is being wound down by RBS, are subject to a Financial Conduct Authority inquiry.
The government’s role in the scandal has also come under scrutiny, after it emerged last year that the now disbanded Asset Protection Agency, which insured RBS’s toxic loans, had urged the GRG to be tougher on the bank’s business customers.
RBS declined to comment on the legal case, but said that GRG had helped customers to minimise their losses where it could and “successfully turned round the vast majority of businesses it worked with”.
It added that a legal inquiry had found no evidence that it “set out to artificially distress otherwise viable businesses”.
SBCB Comments: The truth will out! The evidence is out there and we have wind of it.