RBS Global Restructuring Group

The Royal Bank of Scotland (“RBS”) has been subjected to a number of well-publicised and serious allegations over the last two years in relation to the conduct of its Global Restructuring Group (“GRG”).

The Allegations and the Tomlinson Report

The allegations led to the publishing of a detailed report by Dr Lawrence Tomlinson in November 2013, entitled “Banks’ Lending Practices: Treatment of Businesses in Distress”. Essentially, the report alleges that RBS used its GRG division to generate revenue from customers in financial distress by charging increased fees, interest margins and the devaluing of assets. Further, more specific allegations regarding GRG’s practices raised in the report include:

• Minor breaches of loan covenants being relied upon by RBS in order to force a transfer of customers’ businesses into the Bank’s GRG;
• ‘The undervaluing of customers’ property resulting in a breach of loan-to-value covenants; and
• systematic and institutional’ behavior in artificially distressing otherwise viable businesses, putting its customers ‘on a journey towards administration, receivership and liquidation’.

Property Participation Fee Agreements

As part of RBS’s GRG strategy, it required a number of customers to enter into Property Participation Fee Agreements (“PPFAs”) with its subsidiary, known as ‘West Register’. A PPFA is essentially a contract which provides for a return or payment from the Bank’s customer, and which is linked to the value of the customer’s asset(s). In certain circumstances, customers may have a claim against the Bank in relation to the PPFA, e.g., if they have been unfairly and unlawfully forced into entering into it or they have been negligently advised as to its terms.

How can Ellis Jones help you?

We have received and acted upon a number of complaints from clients in relation to RBS’s GRG division, West Register and/or Property Participation Fee Agreements and are experienced in advising and dealing with such matters.