RBS held to account for failed residential projects
February 5, 2015 § Leave a comment
An article has come out in Real Estate Capital about John Morris, the developer of luxury scheme Charters in Sunningdale, suing RBS for an alleged breach of loan agreement.
Two special-purpose vehicles set up by Morris, Charters Development (CDL) and Castleleigh Holdings, were placed in administration by RBS in May 2009. The administrators sold Charters to RBS’s property subsidiary, West Register, at the knock down price of £15.8m. RBS is understood to still own Charters.
The West Register is part of the bank’s controversial Global Restructuring Group (GRG). The GRG has been the subject of intense scrutiny as it has been said to been profiting from the financial distress of companies it was meant to help.
Morris lodged his High Court writ in December, seeking damages of more than £11m, representing the profit he claims CDL would have made on Charters but for RBS’s alleged breach.”
Morris says he has spent “the thick end of £1m” in legal fees to get to the pint of serving the writ, but has no intention of backing down. He adds: “I’ve been dealing with this bank for 40 years, with ups and downs. I’ve never sued my bank before but what they did was patently wrong.”
Click on the link below to read the full article
RBS deputy CEO Chris Sullivan leaves the bank early
January 7, 2015 § Leave a comment
Chris Sullivan, the deputy CEO at Royal Bank of Scotland has left the bank earlier than expected and a month after apologising to MPs for giving incorrect evidence relating to RBS’s controversial Global Restructuring Group, the GRG.
The news has been picked up in all major publications:
RBS sued by luxury residential developer
January 7, 2015 § Leave a comment
From an article featured in Real Estate Capital:
Royal Bank of Scotland is being sued in the High Court for an alleged breach of a loan agreement involving one of the highest profile residential developments to fall victim to the downturn, Real Estate Capital can reveal.
John Morris, the developer behind the luxury Charters scheme near Sunningdale, south west London, is suing RBS for reneging on an agreed banking facility to finance the final construction works at the site in September 2008.
The writ claims that the development could not be completed without the facility being honoured and, as a direct result, at least two purchasers refused to complete transactions.
Two special purpose vehicles set up by Morris for the development – Charters Development Ltd (CDL) and Castleleigh Holdings Ltd – were then placed in administration by RBS in May 2009.
The administrators subsequently sold Charters to RBS subsidiary West Register. It is understood that the bank still owns Charters.
Morris, who lodged his writ with the Chancery Division of the High Court earlier this month, is seeking damages of more than £11m, representing the profit CDL would have made on Charters but for RBS’ alleged breach.
Morris told Real Estate Capital: “We had scrupulously honoured all our commitments to the bank and this was acknowledged in the minutes of their credit committee. The bank however reneged on its agreement with us and, as a result, we were unable to complete the sales which we were on track to deliver.”
An RBS spokesperson said: “A claim was served upon RBS by letter dated 3 December 2014. The bank intends to defend this claim. Given the existence of on-going litigation, it would not be appropriate to make further comment on this matter.”
Morris’ legal action brings the spotlight back on to West Register, part of RBS’s controversial Global Restructuring Group, which the bank was forced to wind down in August amid allegations that it profited from the financial distress of companies it was meant to help. The Financial Conduct Authority is currently investigating the allegations, which RBS denies.
RBS was the principal creditor at Charters and placed the scheme into the hands of administrators at PWC in May 2009 when only 15 of the 34 flats were sold. At that point, the bank was owed over £30m.
Morris claims that RBS placed Charters into administration shortly after rejecting an offer of more than £30m for the freehold from Morris backed by Investec. In May 2010, PWC assisted RBS as mortgagee in possession and sold Charters to West Register for £15.8m.
However, the legal action relates solely to the negotiations between Morris and RBS in mid-2008, when Charters was near completion and the bank’s loan facility had risen to £60.6m – of which a substantial amount had been repaid.
In the writ seen by Real Estate Capital, Morris’s claim centres around bank funding of £2.54m which RBS’s credit committee agreed on 8 September 2008 was “essential” according to the writ and would be made available to pay the main contractor, Trant, to complete construction. Morris alleges that the money was to be made available through a subsequently “blocked account” which both sides were supposed to have access to.
Morris set up the account to take deposits and the proceeds of apartment sales at Charters to be held in escrow until practical completion. Over £30m was placed into the blocked account. Morris alleges that express and implied assurances were given by RBS that the £2.54m would be made available to provide for sums to complete the project. Unknown to Morris, RBS had emptied the account before the cheques were drawn.
RBS bad bank to sell £250m resi portfolio in ‘Project Maison’
October 9, 2014 § Leave a comment
Europroperty has reported that RBS is selling a £250m large residential portfolio that it brought back from borrowers through its West Register asset management division.
Codenamed ‘Project Maison’, Savills has been appointed to sell the portfolio of 1,500 plus residential units across the UK. It has been said that this sale could go for £250m.
Read the full article in Europroperty here
It will be interesting to know how much RBS paid for this portfolio and how much they are going to make from it.
RBS faces class action from 800 companies who claim they were exploited if not destroyed by the controversial Global Restructuring Group (GRG)
September 16, 2014 § 1 Comment
About 800 small and medium-sized companies are planning to sue RBS as a result of the activities of the bank’s global restructuring GRG division. The RBS GRG Business Action Group has appointed the law firm, Clyde & Co, to review these allegations.
Earlier this year RBS announced it was closing down the controversial GRG, after it was the subject of intense scrutiny since the former government adviser Lawrence Tomlinson published a report accusing the GRG of misconduct.
Read the full article in The Times here
RBS handing out £millions in bonuses despite causing misery to those businesses forced into administration
August 13, 2014 § Leave a comment
The Royal Bank of Scotland has awarded 10 executives £3.5m worth of shares despite its sixth year of consecutive losses that have so far totalled £45bn. Executives including Rory Cullinan, head of the ‘bad’ bank, and Chris Sullivan, RBS’s deputy chief, will receive the equivalent of 100% their salary in bonuses. The announcement comes at RBS is still causing misery to those who businesses is being put into administration.
Last month Sullivan told the Treasury select committee that the GRG was “absolutely not a profit centre”, but was later forced to admit that this was not true. Last week RBS announced it was closing down the controversial GRG division.
“GRG has been the focus of allegations – notably by Lawrence Tomlinson, an adviser to the business secretary, Vince Cable -that it forces viable small businesses to the brink so the bank can buy up their properties and make a profit.” – Guardian, 13th August 2014
Read the full article in the Guardian here
Executives resign after RBS finally admits the GRG is a profit centre
August 12, 2014 § Leave a comment
The heads of the Royal Bank of Scotland’s controversial Global Restructuring Group (GRG), Derek Sach, and Aubrey Adams, the unit’s head of property have resigned and will leave the bank at the end of March 2015.
The announcement comes after Sach denied in front of the Treasury Select Committee the GRG was a “profit centre”, only for RBS to finally admit that this was completely the case.
It is now out in the open that GRG was not a destination for distressed assets, but for prime assets as was always maintained by those whose businesses were destroyed by RBS and had their assets siezed .
This news has caused yet another media frenzy and has been picked up by every national newspaper.
CoStar News examines RBS allegations
November 27, 2013 § Leave a comment
CoStar News first wrote about complains of RBS misdemeanours two years ago, when it looked at the cases of John Morris and Charters and Innes Bernsten and Chris Richardson of the Coniston Hotel.
Its coverage of the current scandal surrounding the Tomlinson Report has focused particularly on the role that the West Register has played in the allegations that the bank is facing, including quotes from an ex-RBS employee who has been whistleblowing on the bad practice of the GRG (Global Restructuring Group).
“Each month relationship managers would submit the figures for their customers to the credit team in the bank. Should anything flag, it would be passed to the ‘watch’ committee.
“For example if a business is not in breach of its banking agreements but is say 10% down on budgeted performance, they will keep their eye on it.
“They may decide to offer it to GRG, or order a check of the business’ LTV. If GRG want to take it, and see some value from the business for the bank, it would then be passed directly to GRG and the relationship manager would be prevented from contacting the business at all going forward.”
The latest update is that the Serious Fraud Office is considering a criminal investigation into the allegations, as reported on the front page of today’s Financial Times.
RBS fallout continues as Tomlinson Report is published
November 26, 2013 § Leave a comment
The Sunday Times’ explosive report on RBS’ “killing off small businesses” and the publication of the Tomlinson Report has led to a media frenzy, with every national newspaper and news broadcast covering it yesterday, and the fall out still happening today.
In response to these allegations, RBS has issued a statement saying that “GRG successfully turns around most of the businesses it works with” and that “not all businesses that encounter serious financial trouble can be saved”. It justifies its actions by claiming that the West Register exists to sort out bad business, and has appointed law firm Clifford Chance to defend itself against the damming allegations coming its way.
The case of Charters contradicts these statements though, as its loan was not bad until RBS stepped in. The development was profitable and successful until the bank intervened. When RBS sold the development to its own vehicle, the West Register, it did so at half the price that developer John Morris had offered to buy it back for. Just two weeks before the developer was notified of the impending administration, the bank credit committee had unanimously past the last loan facility and commended the developers management for its impeccable running and management of the estate. Certainly runs at odds with RBS’ claim that the West Register steps in to rescue and help distressed businesses.
With other borrowers telling their stories, including that of the Coniston Hotel, which this blog has been looked at before, it looks like Clifford Chance will have its work cut out.
The full Tomlinson Report can be found at http://www.tomlinsonreport.com/.
The Sunday Times puts the West Register under scrutiny
November 25, 2013 § Leave a comment
The Sunday Times’ ‘Insight’ team has run an in-depth analysis of how RBS has been using the West Register to miss-sell a number of ‘distressed’ properties.
Looking at the story of Charters, the Coniston Hotel in Sittingbourne and many others, the piece is a must-read for those looking at the dodgy dealings of the West Register.
Read the full article here http://www.thesundaytimes.co.uk/sto/news/insight/article1344611.ece
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