Surinder Hullait, a Birmingham entrepreneur who developed commercial properties, says that a race to shore up an ailing balance sheet chimes with his experience of GRG.
“GRG ruined my business. It was, let’s pull in everything we can to save our necks and to hell with everybody else.”
Mr Hullait’s business was put in GRG in 2011 after a loan expired. He says that he didn’t miss any payments and that RBS documents from 2010 show they regarded him as a “good customer”.
In GRG, he says that he was charged a higher interest rate and thousands of pounds worth of additional fees. A “desktop” valuation conducted by bank staff rather than independent surveyors slashed the value of Mr Hullait’s assets and resulted in him losing two properties. “Based on their new valuation, my loan-to-value was 100 per cent. In truth, based on their own paperwork, it was 60 per cent, which is more than healthy. They concocted the breaking point.”
He believes that the division’s aim was to extricate the bank from costly positions it no longer wished to honour — even if the customer was viable.
“The personal impact has been diabolical, it has hit my health, my family, my relationship with my wife. Never in my worst nightmares did I think the bank would do this to me. People don’t realise the scale of what has gone on.”
RBS has said that it made a loss of more than £300,000 on the sale of Mr Hullait’s assets.
A source close to GRG, who declined to be named, said that the drive to reduce risk-weighted assets meant pressure was often applied to small and medium-sized businesses that unwittingly found themselves at the wrong end of an RBS rating related to their capital impact on the bank.
Those at the higher end of a rating system, which ran from one to 27, were “horrendous” for the bank’s capital, he said. He claimed that one tactic employed to help to resolve the situation was to create a breach of a customer’s loan agreement by changing the loan-to-value criteria of the assets the debt was secured against. This would often lead to loans defaulting.
“Smoke and mirrors” is how he described the tactics of a unit, which he claims deliberately kept customers in the dark. “You have to keep the plebs in their place, was the ethos.”
SBCB, a claims management and private criminal investigations firm, said that it is preparing to pursue RBS through the courts over GRG.
Andy Keats, a director of SBCB, said that it was “deeply disturbing” that a drive to improve a bank’s capital position could have such a negative impact on small companies. He added that he feared other lenders may have taken a similar approach. The information revealed today applies to all banks, not just RBS. On the basis that it is revealed that there is an incentive to deliberately default a properly performing business loan, the question has to be, why wouldn’t a bank in financial trouble do so?”
RBS denies that it mistreated customers.