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January 31, 2019updated 30 Jan 2019 4:27pm

Treasury agency had role in Global Restructuring Group activity

Documents show the HM Treasury’s Asset Protection Agency influenced Global Restructuring Group (GRG)'s strategy and aggressive SME lending practices.

By Christopher Marchant

Documents show the HM Treasury’s Asset Protection Agency influenced Global Restructuring Group (GRG)’s strategy and aggressive SME lending practices, according to reports by the BBC.

The GRG operated as an arm of RBS from 2005 to 2013, and has faced controversy over its practices since a leaked report in 2017. The report showed that GRG, instead of seeking to salvage companies in financial difficulties, were more likely to exploit them for fees, with only 10% returning intact to the main RBS Bank.

Evidence revealed in legal proceedings launched by former customers of GRG have shown that The Asset Protection Agency encouraged RBS to withdraw support for embattled lenders when the bank did not otherwise intend to do so.

According to the BBC, official Asset Protection Agency documents also suggest the bank was prohibited from releasing GRG customers from secured loans without its approval, giving the Treasury an effective veto on any re-financing by business customers wanting to exit the GRG.

Under the Asset Protection Scheme, part of the government bailout in the 2008 financial crisis, loans worth £282bn were insured against default by taxpayers, limiting the potential losses to which RBS was exposed.

Between 2009 and 2012 the Asset Protection Agency staff were in charge of overseeing the GRG scheme. Its stated goal was “to maximize the value of the assets in the scheme and reduce the probability of payouts”.

In July last year, the Financial Conduct Authority (FCA) said it would not take further action over RBS small business turnaround unit Global Restructuring Group (GRG), because it does not have the appropriate disciplinary or investigative powers to address past misconduct in the division.

Consumer litigation against GRG is being led by Oliver Morley Estates, an Altrincham-based property business.

A statement by RBS read: “The bank fundamentally disagrees with Mr Morley’s claims and does not believe they have any merit. It will contest them vigorously in court. The bank incurred around £30m of losses on the £75m it lent to Mr Morley, who was a sophisticated customer in receipt of extensive professional advice.”

On GRG findings, linking to FCA investigation and wider allegations, RBS said: “The FCA has confirmed its independent review found no evidence that RBS artificially distressed and transferred otherwise viable SME businesses to GRG to profit from their restructuring or insolvency. Nor did it identify any cases where the purchase of a property by West Register alone gave rise to a financial loss to the customer.”

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