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

Real Estate Capital (Feb 2015) – John Morris vs RBS Case

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:

 

Financial Times 

The Telegraph

Reuters  

Bloomberg

The Times

The New York Times

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. 

Wall Street Journal

The Guardian

Financial Times

The Telegraph 

Reuters 

Property Week

 

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