RBS's 'black hole' GRG devouring it's landowning customers

Tony Gosling tony at cultureshop.org.uk
Wed Jan 15 00:08:04 GMT 2014

Landowner accuses RBS of trying to bankrupt him

Bain Business Correspondent/Personal Finance Editor  Friday 20 December 2013
A landowner has accused Royal Bank of Scotland of 
trying to bankrupt him in order to grab a 
valuable Aberdeen property site to hand to its West Register subsidiary.
RBS is seeking a summary decree in the Court of 
Session today against David Booth, 41, to recover 
a £1.35 million loan the bank made him in 2007 to buy the site at Peterculter.
Mr Booth recently had the site valued at £1.5m 
and believes it could have an ultimate 
development value of £12m. RBS, however, has 
obtained a valuation of £750,000. RBS says the 
loan period has expired, but Mr Booth says he has 
been prevented from repaying as his affairs have 
since 2009 been controlled by the bank's Global 
Restructuring Group (GRG), which has refused to 
let him put the site on the market and has withheld all his bank statements.
Mr Booth said: "For the last four years RBS have 
refused to give me bank statements, by doing that 
... I can't go to another lender - or even complete a tax return."
The recent report for the government by 
businessman Lawrence Tomlinson accused the bank's 
GRG of systematically under-valuing properties in 
order to engineer defaults, and using 
insolvencies as a means of acquiring assets which 
West Register could later sell on at a profit, as 
part of the taxpayer-owned bank's recovery.
Mr Tomlinson spoke to 400 businesses, and was 
contacted by a further 250 after the report was published three weeks ago.
He said they reported a "culture of fear" once 
GRG took control and then an "unfair and opaque" 
insolvency process with potential conflicts of 
interest. A bank source said last night that 
claims of the bank deliberately sinking 
businesses to acquire assets were "anonymous 
allegations which are being investigated by Clifford Chance" (RBS's lawyers).
Mr Booth said he had enjoyed a "fantastic 
relationship" prior to 2008 with RBS, which had 
encouraged him to buy the Aberdeen site with a 
view to demolishing an existing property and developing affordable homes.
RBS claims the loan was agreed for 12 months 
only. Mr Booth, however, says it was agreed on 
the basis of a five-year development, with 
interest rolled up and paid at the end, at 1% above base rate.
As soon as GRG was created in 2009, it obtained a 
new valuation of the site from its regularly-used 
surveyors Graham & Sibbald, Mr Booth said. "They 
then said you are in default, your assets are 
less than what you have borrowed. But the fact is 
the site has been valued this week at between £1.5m and £1.8m."
RBS began to seek his sequestration in 2011, Mr 
Booth said, but there followed negotiations 
between RBS and law firm MBM Commercial. 
According to Mr Booth, he was eventually told 
that "GRG had decided there would be no settlement".
When Mr Booth finally got access recently to four 
years of bank statements he discovered interest 
on the loan had not been rolled up but added to 
his overdraft at the default rate of 29.5%, 
hiking the overdraft from £20,000 to £260,000. He 
says: "In the loan documents it states that 3% is 
the highest rate they can charge."
Mr Booth says the bank's actions forced him to 
cease trading all his business operations. The 
bank claims a debt of almost £1.7m, and stresses 
that the customer has promised a counter-claim but failed to raise one.
Mr Booth said: "They are asking for a summary 
decree so they can knock me out and get their 
hands on that land. If West Register sit on it 
they can put it through the development process 
and could realistically realise about £12m."
An RBS spokesman said: "We are going to court to 
get the back the money we are owed, we are not going to acquire a property.."
RBS has told the court that Mr Booth has 
"repeatedly failed to plead a relevant case 
despite the many opportunities afforded him to do 
so". It says the summary decree procedure exists 
"as a remedy to deal with precisely the type of 
abuse which one sees in the defence of this 
action" and that its claim for payment is "unanswerable".

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