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