Royal Bank of Scotland bankrupts busineses

  wee eddie 06:47 AM 25 Nov 13
Locked

I'm disgusted, if there is a scintilla of evidence that RBS has bankrupted a single business for it's own gain. I'm closing my account with them.

They have broken the very trust that makes the Banking Business work.

I will wait a while until I find out what has actually happened but, if I witness, prevarication or legal quibbling by RBS, then in my opinion the only way to make myself plain is to close my Account and to urge others to do the same.

If sufficient Customers leave, then they will hurt.

  fourm member 08:32 AM 25 Nov 13

My first reaction was 'this old story'.

'Private Eye' has been reporting on companies that seem to have been brought down by their bankers for the benefit of the bank for a couple of years at least.

The sequence of events is fairly clear - company has a bit of a problem, bank provides 'expert assistance', expert says company can't be saved, bank sells off assets and gets its loan back plus big fees for the 'assistance'.

What is harder to know is whether that is a pre-planned sequence or just the way it works.

I'm a little concerned that the man behind this report was personally involved in a company that went down this path and I didn't think Vince Cable's comments on breakfast TV allayed those concerns in full.

  spuds 11:28 AM 25 Nov 13

Any links to this story?.

The activities of banks are of very little surprise now or in the past, and even last week there was an television investigation programme about how certain banks are still conducting themselves, even though they have been warned?.

Suggesting that closing accounts will hurt a bank is perhaps not the most brilliant idea, but getting a watchdog with teeth might, but that's very unlikely at the way things are going?.

What always comes to my mind in circumstances like this, is the fact of what Alistair Darling told the major banks on the eve of the recent banking disaster. The representatives of the banks present were making demands, and Alistair Darling had to point out to them, that none of them had anything to demand with, they (the banks) were actually insolvent or bust. Hence the public bail-out!.

  aquatarkus 18:15 PM 25 Nov 13

Hi there Was listening to LBC this afternoon while driving through London and listening to some of the absolute horror stories from people / companies where the banks have literally destroyed companies / people on some of the discussions the LBC presenters could only describe it as blackmail by the banks.

Regards Aquatarkus

  wee eddie 20:54 PM 25 Nov 13

My leaving RBS will make little difference to them, nor will the loss of 100 or 1,000 Accounts affect them.

However the loss of 10,000 Accounts would rattle their cage

  morddwyd 21:24 PM 25 Nov 13

Don't see the problem.

Banks lend money against a security, i.e. a business. If the business fails to comply with the terms, they foreclose.

That's what they do, that's their business.

Mortgage companies do the same.

  Forum Editor 08:49 AM 26 Nov 13

Let's make a distinction here.

If it can be shown that a bank has deliberately brought about the failure of a business in order to profit from it, then there is a case to answer. It has been alleged that RBS has done just that, by demanding independent expert reports from businesses in difficulty, and enforcing other measures that cost the businesses so much that they have failed. It is alleged that the bank then picked up business assets at rock-bottom prices to offset the debts.

If. on the other hand, businesses have failed because they could not meet repayments on loans, or because they have exhausted their overdraft facilities, and the bank withdrew financial support, there is not a case to answer - it's a hard world, and banks have been severely criticised in the past for profligate lending.

Time will no doubt tell which of these scenarios is the correct one. In the meantime let's be careful about making assertive statements about what is the true state of affairs.

  fourm member 09:05 AM 26 Nov 13

morddwyd

That's a very binary way of looking at the situation.

There are companies that are viable and there are companies that are not.

There are, though, companies that are heading towards trouble but could turn around or fail.

Now what matters is a mixture of short-termism and accountancy rules.

If the bank moves in, shuts down the business and sells off the assets it will either show a profit on the deal or fully recognise its losses and put them behind it. Share prices are all about 'it will be better tomorrow'.

If the bank decides to work to keep the company in business, it has to recognise the risk by making a provision against the loan so it has to take a loss and no-one values the chance that it might get its money back in two or three years.

So, the best choice (for the 'markets') is to put the business out of business.

Then you move on to the next stage.

Because no-one questions a decision to take control and liquidate, the opportunity arises for managers to decide to shut down businesses that could be saved knowing that those are the ones where the assets will be worth something and the banks fees will be met as well as getting the loan back.

  spuds 09:53 AM 26 Nov 13

Perhaps we might look at this in another way on how banks work, and you may not need to look any further that a creditor's meeting when a business is forced into insolvency.

Who are the first on the list for payments from an insolvency, and who benefits the most, and it sure isn't the small business trying to survive for a little longer. I have personally witnessed on at least three occasions how banks work at an insolvency meeting, and in each case it showed how ruthless they are or can be. Yet the laws and regulations always seem to be on the banks side.

Pity this same attitude was not taken, when some of the banking institutions had serious shortfalls in their own finances, and the public had to bail them out, due to their previous bad banking practises?.

  fourm member 12:19 PM 26 Nov 13

'how ruthless they are or can be.'

That's another indication of how complex the situation is.

If a bank is the administrator of a company it has a legal obligation to a) get the most money for the creditors and b) distribute any money strictly in accordance with the law.

If the bank's administrator tells a 90-year old widow that she can't have back the money she paid for a new chair the day before the firm went into administration it is obeying the law but will, obviously, seem to be ruthless.

To be clear, I'm not defending the banks. I'm trying to show why it is difficult to see wrong-doing when doing it according to the law looks wrong on many occasions.

  spuds 12:50 PM 26 Nov 13

But what happens when a bank is not the administrator, but a creditor like anyone else. And that is a point worth considering, that the law might be in favour more for some than others, including the government's own revenue collecting agencies?.

Did the government clearly state at one time, that the small business ventures would benefit from an host of schemes and ideas,and life would be much easier, especially if it involved going through a heap of strangling red tape. And all the major banks had a roll and were provided with incentives to play in this. Ask any small business owner if they are finding things as simple or easier as was suggested?.

Giving an example of a 90-year old widow, as very little to do in regards to a bank being ruthless, they are only providing advice. Now had that bank been hounding that widow out of her house,and onto the street without care or consideration, then that might show how ruthless a bank might become?.

We refer to banks, but is it not the individual's working there that make the decisions. Our own supposedly fellow human beings, and pure selfish greed should have no roll in that?.

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