grg - seneca presentation

SENECA BANKING CONSULTANTS 1

BUSINESSES AFFECTED BY RBS’S GLOBAL RESTRUCTURING GROUP (GRG)

W W W . S E N E C A B A N K I N G . C O . U K

SENECA BANKING CONSULTANTS2

The introduction of the Complaints Review scheme is just the tip of the iceberg. Having assisted customers of GRG for over 4 years, this should be the first of many steps that RBS should take to compensate those who have been affected.

Daniel FallowsDirector



Timeline of key GRG events 04

What is GRG? 06

What is West Register or a Property Participation Fee Agreement? 07

How do I know if I was correctly placed into GRG? 07

How do I know if I’ve been mistreated in GRG? 08

Why shouldn’t I wait and see what happens in the RBS review? 09

Can I still claim if my company has gone into administration or is dissolved? 10

How much can I claim? 11

How long will it take? 12

Who will be handling my claim? 12

What if I receive a redress offer that is not fair and reasonable? 13

Will I need to go to Court/enter into Litigation? 14

Does it matter if I leave it a few months until I re-finance? 15

What does it mean if my claim is time-barred or outside of limitation? 15

I entered into the GRG years ago can I still claim? 16

About Us 17

Seneca Banking Team 18

Is Seneca Banking a Law Firm? 19Will you claim for my consequential losses e.g loss of property, loss of busi-ness opportunity and loss of reputation?

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How successful have you been? 20


TABLEOF CONTENTS


January 2014

April 2014

November 2013

In April 2014, RBS responded by calling in the law firm Clifford Chance to do an “independent review” of the Tomlinson Report and the treatment of businesses

within GRG.

Tomlinson released a report in January 2014 which claimed that RBS profited heavily from struggling businesses by placing them into RBS’s “turnaround

division” — the GRG unit. He included real life case studies of businesses that claimed they were purposely

engineered into default by the Bank.

It became apparent that RBS was able to increase revenue by charging higher

fees and margins for the struggling businesses in GRG and this, in turn,

would allow the Bank’s property/equity acquisition division, West Register, to

purchase devalued assets, with the sole intention of generating significant fee income for the Bank, to the detriment

of its customers.

The FCA appointed Promontory and Mazars.

Royal Bank of Scotland (RBS) undergoes an independent skilled

person review of its lending practices, following allegations that the Bank

intentionally put down good and viable businesses, in the interest of boosting

the Bank’s profits.

Lawrence Tomlinson, an independent businessman who owns the

construction and healthcare group LNT Group, was asked by the then UK Business Secretary Vince Cable to investigate problems small- and

medium-sized businesses were having with the Bank in relation to GRG.

Cable instructed two consultancies, Promontory and Mazars, to produce a

report in relation to the GRG unit in RBS, on behalf of the Financial

Conduct Authority.

Timeline of key GRG scandal events


£

£


October 2016

November 2016

August 2014July 2014 RBS shut down the GRG

unit, and in January 2015, Chris Sullivan left the Bank.In July 2014, Andrew Tyrie, the

chairman of the Treasury Select Committee criticised RBS for being “willfully obtuse” and delivering a “belated U-turn” when the panel grilled RBS executives over the

GRG unit.

RBS Deputy Chief Executive Chris Sullivan and GRG boss Derek Sach sent a letter of apology to the TSC

panel for misleading statements made.

“It now appears that RBS has been wilfully obtuse with the committee.

If this is how RBS deals with a parliamentary committee, can

customers and regulators rely on it to be straightforward with them?”

said Andrew Tyrie at the time.

The FCA received the final report from the

skilled person.

GRG documents leaked “project dash for cash”. RBS announce Complaints

Review scheme for those affected by GRG.

GRG scandal events



Key Points

What is GRG?

16,000 companies were allegedly pushed into the GRG unit after the onset of the financial and banking crisis of 2008. Below are key facts uncovered in the BBC/Buzzfeed leaks which relate to the vast size of the GRG:

The Global Restructuring Group (GRG) was RBS/Natwest’s turnaround division. Many business banking customers of RBS and Natwest were informed they were “over-geared”

or underperforming, and as such were transferred to the GRG.

In the vast majority of cases, GRG was used to secure as much return for the Bank as possible, regardless of whether the business was performing well or not. Aggressive restructuring, lack of transparency around fees and debt for equity swaps known as PPFAs are just some of the ways businesses were affected by GRG.

SENECA BANKING CONSULTANTS

£1.2 Billion £3+ Billion £65 Billion 2704GRG’s profits in a

single yearassets and equity acquired

from customersvalue of firms it

controlledproperty stakes taken

from customers


West Register is the division of the Bank which was responsible for buying and managing the assets of companies within GRG, including property and equity stakes. In April of 2014 it was reported that West Register was to be wound up in response to the claims against GRG.

Property Participation Fee Agreements (PPFA) were imposed by RBS and allowed the Bank to secure large participation in the value of customers’ assets. A business would usually be offered a new loan, with extortionate and often complex fee structures.

What is West Register or a Property Participation Fee Agreement (PPFA)?

How do I know if I was correctly placed into GRG? There is no prescribed test as to which business and situations would trigger the transfer of a business into GRG. The unit was initially set up to help struggling businesses, however, successful and well run businesses were often put into GRG, as the Bank saw an opportunity to secure as much capital for themselves as possible.



How do I know if I’ve been mistreated in GRG?Common indications of mistreatment would include:

• Not knowing why you are suddenly being managed by GRG;

• Payment of GRG management fees;

• Complex and aggressive restructuring of facilities;

• Bank insisting you pay an external accountancy firm to do an IBR (Independent

Business Review);

• Forced sale of assets at a discount ;

• PPFAs being insisted by the Bank; and

• Any involvement with West Register.


Why shouldn’t I wait and see what happens in the RBS review?Experience of the interest rate hedging product (‘IRHP’) review scheme sadly demonstrates

that the interests of claimants may not be safeguarded by a compensation scheme

operated and managed by the Bank itself. Similarly, there are concerns as to whether a

GRG scheme will lead to proper and fair redress.

Typically, the Bank’s review scheme can be a slow process and it is important that you

appoint a party like Seneca who will be in continuous contact with the Bank to ensure

your complaint is being processed through the review as quickly as possible.


In order to place your business into the best possible position within any compensation

scheme and also to protect against the potential of being time-barred in future potential litigation (the “limitation” issue), we would recommend that businesses involve experienced and specialist advisers at the earliest point possible.

Seneca Banking can provide valuable assistance in presenting claims and organising expert reports on the following issues:

The legitimacy of entry into the GRG;

The appropriateness of additional fees, charges, interest and penalties whilst with the GRG;

The effect of entry into the GRG and the imposition of fees etc on liquidity and credit status;

Consequential losses, including under-value asset sales or transfers, loss of profit, loss of favourable invoice and credit terms; and

Framing the complaint into a legally recognisable and persuasive package.

The Complaints Review scheme will not be straightforward and will involve complex and fact specific issues. The early assistance of experienced professionals is highly recommended.


Can I still claim if my company has gone into administration or is dissolved?Entering into administration or having a company dissolved with an outstanding GRG claim is not straightforward and can be very onerous. You may not know whether or not you should or can pursue a claim.

Seneca has experience both in working with clients who are in administration and also with working alongside administrators. Seneca will advocate for your claim to be pursued under the Review and for the FCA to take a more pro-active role in ensuring that claims from companies in administration are heard.

If your company has been dissolved you can still make a claim if you qualify as an Interested Party such as a shareholder, former director, administrator or liquidator, or a major creditor. Seneca will provide the guidance which you can take to pursue the claim and also to reinstate the company so that the money offered may be recovered.



Will pursuing a claim damage my current relationship with my Bank?

How much can I claim?It is difficult to determine how much you should claim for and whether or not an offer of redress is fair.

You may be willing and encouraged by your Bank to settle for just a refund of fees, when in fact you may be entitled to more. You may not feel able to negotiate your offer with the Bank and may not know you can claim for additional losses or what those losses could be.

Seneca can calculate exactly how much you can claim. The pricing team within Seneca provides detailed pricing schedules which outline all of the direct losses as a result of entering into the GRG.

Seneca are able to advise on all consequential losses suffered as a direct result of GRG where reasonably foreseeable and have partner forensic accountants that can quantify more complex losses such as loss of profit and opportunity.

The RBS Complaints Review scheme is a separate process outside of the normal day to day banking of the business. If Seneca were to submit a claim on your behalf this should have no bearing on your current banking facilities.

The FCA has outlined that previously Banks are not to penalise businesses or individuals who submit a complaint as part of the Complaints Review scheme.

We understand your concerns regarding how RBS may react to a claim and whilst no one can guarantee that the Bank will not go back on any agreement and will not demand payment, which as you know they could do at any time as it stands, there is a precedent from the FCA’s interest rate hedging product (IRHP) review scheme which provides guidance to Banks. The precedent provided for a moratorium on payments and on taking any adverse actions to negatively impact the lending arrangements of participants within the review. The BBA (British Bankers Association) has stated previously that where the Bank determined

financial distress to be present in relation to meeting ongoing swap payments, the Bank will, at the customers’ request, suspend the collection of payments pending the outcome of the review. Further, it was agreed that the Banks would not take any action which could adversely impact customers’ lending arrangements unless absolutely necessary to preserve the company, and in those instances would not be done without consent.

So whilst we cannot promise that the Bank will maintain existing agreements, there is a clear argument for the Banks to do so. Likewise, with the very negative publicity. It is likely that the Bank would be reluctant to garner any further negative press. In our experience, we have not encountered incidences where the Bank has taken adverse actions against a client with an ongoing complaint, however, this does not necessarily mean that in your circumstances this would be the case. It would need to be reviewed on a case by case basis, with your concerns reviewed in the context of existing arrangements.

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How long will it take?

Who will be handling my claim?Here at Seneca Banking, we ensure that all claims are handled and managed directly by an expert claims analyst who will work with clients on a one-on-one basis. The claims analysts are supported by in-house solicitors and financial experts. The specialist pricing team will compile the pricing report using the expert knowledge they have to present your losses to the Bank.

Seneca is the leading company handling these claims. We have a wealth of experience in progressing claims and ensuring that we submit to the Bank the strongest arguments possible to substantiate your claim. The claims analysts following a brief initial review of your complaint are able to see where the strengths lie in your specific complaint and where the weaknesses are that need to be defended against.

If you look at our website you will see everyone on the team and their varied expertise.

Each complaint is handled on a case by case basis, with the time required to resolve each complaint varying.

It is important that you have people who understand the review process and can put pressure on the Bank to ensure your complaint is being processed as quickly as possible.

Seneca is able to contact RBS at all points throughout the review process to ensure that it is handling your complaint as quickly and efficiently as possible, for example, by ensuring it has all the necessary documentation. We can also write letters to the Bank outlining why your specific financial circumstances merit you being pushed though the Review process as a matter of urgency.



You may not feel confident negotiating with the Bank, or, depending on your relationship with your Bank, you may not feel like you are in a strong position to negotiate appropriate redress. Also, if the Bank has a team of solicitors on its side, you may feel as though you do not have the same bargaining power as the Bank.

What if I receive a redress offer that I do not think is fair and reasonable?

We have significant experience negotiating claims with the Banks, and have former Senior Bank Management and Solicitors on our team, who will be able to judge whether or not your offer is fair and reasonable. We deal with the Banks every day and have the expertise to help you level the playing field.


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In most cases litigation is not the first course of action. Normally, Seneca will explore other avenues first, namely the RBS review and the Financial Ombudsman Service, prior to litigation.

However, litigation can put pressure on the Bank to negotiate and may be faster than the Bank Review process to resolve the complaint. If Seneca determine that litigation is appropriate, we will approach our partner law firm to ascertain the grounds for litigation. Seneca and our partner law firm will then have a meeting with you to discuss the next steps, prior to taking any formal steps toward litigation.

Litigation shall not be entered into without your express approval and Seneca will manage your claim throughout the process, ensuring you have a familiar point of contact during proceedings.

Will I need to go to Court/enter into Litigation?


Does it matter if I leave it a few months until I re-finance?As the RBS Review is separate from your everyday banking it appears that there is no reason why you should delay raising a complaint if it appears you have grounds to complain. The Bank should not amend any facilities it has offered to you or refuse to make funding available because you have made a complaint through the RBS Review.

Seneca has experience in helping many businesses who are still eager to maintain a relationship with RBS, however, feel it is important that they seek redress for their treatment in the GRG.

Seneca is able to work alongside the Bank to reach a decision in regards to these complaints and can negotiate with the Bank on your behalf whilst you maintain a good relationship with them.

What does it mean if my claim is time-barred or outside of limitation?

If you are unsure about the statutory limitation for your claim, you may miss a crucial opportunity to keep your options open to litigation as a route to redress. Additionally, if you are aware of your limitation deadline and how long you have left to bring a claim through the Courts, you may not be aware of the fact that you can ‘stop the clock’ on limitation giving you time to pursue your claim through alternative routes, therefore potentially saving yourself the additional cost of litigating.

A partner law firm will be able to assess your claim and indicate whether or not you have a claim for breach of contract, misrepresentation, negligence or potentially even fraud. The general rule is that the limitation period is 6 years from the date each cause of action occurred.

However, it can be difficult to determine the date of each cause of action. If you are already outside of your 6 year limitation period, we will be able to assess whether or not you have a claim for ‘latent damage’ in negligence, which could enable you to bring a claim through the Courts within 3 years of the date of knowledge of the negligent act. Additionally, if you would like to keep litigation open as an option we can draft and send a limitation standstill agreement to the Bank requesting they agree to ‘stop the clock’ on limitation while the product is being reviewed by the Bank. This prevents the Bank from relying on the defence of limitation.



I entered into the GRG years ago can I still claim?Even if you entered into the GRG over six years ago and are strictly outside the statutory limitation period, you can still make a complaint to RBS under the review if you entered GRG on, or after January 2008.

It is important you have experts like Seneca to have an initial review of the complaint toascertain whether or not you can make a complaint by way of the RBS Review, or the Financial Ombudsman Service.

Even if you entered GRG many years ago you may still be entitled to redress.



About UsWhy use Seneca?Seneca will support your complaint through all stages of the RBS Review process, to make a complaint to the Financial Ombudsman Service and will manage your claim if it proceeds to litigation.

Seneca has experience negotiating with the UK’s largest Banks and it is important that clients have a representative to ensure that they can accurately convey the relevant points.

If the RBS Review process is not successful, Seneca has experience in other possible routes to be explored outside of the review.

Seneca can prepare complaints to be submitted to the Financial Ombudsman Service, this includes lodging the complaint with the relevant documentation submitting an appeal directly to the Ombudsman.

Seneca Banking has partnered with experienced commercial litigation solicitors who can handle all aspects of litigation. If Seneca Banking deems it appropriate that the client’s complaint should proceed to litigation we would discuss this matter with them and set up a meeting between the client and our partner law firm.

Our partner law firm is experienced in the area of financial mis-selling and commercial litigation. It works alongside leading barristers who have been involved in high profile financial misconduct cases in the past. Our partner law firm will provide you with advice as to the prospects of success.

The next step would be that our partner law firm progresses the complaint to litigation. This is a good way of putting pressure on the Bank and ensuring that your complaint is processed as quickly as possible. Seneca Banking would still manage your complaint, in order to ensure that you still receive the same service with a familiar point of contact.

Litigation can be expensive however our partner law firm offers access to litigation funding and ATE insurance. If litigation is the next step for your complaint they would arrange a meeting to discuss the various ways that you could manage the costs of litigation.


Seneca TeamThe breadth of experience and capabilities of the SBC team is unmatched in the UK:

Dan FallowsDaniel is a qualified corporate lawyer by trade and has been part of the Seneca Group as a shareholder since inception. Dan has a strong background in Corporate Finance, complex banking matters and regulation/compliance. Dan has a law degree from the University of Manchester and went on to study at BPP Law School. Dan is also an Associate of the Chartered Institute of Securities and Investment.

Tim MurphyExtensive background in finance, including Managing Director of Mid-Cap Structured Finance at RBS, founding partner of Deloitte’s debt advisory business, founder of HBoS UK large corporate and NorthEdge Capital LLP.

Richard ManleyRichard qualified as a chartered accountant with KPMG in 2003. He worked for KPMG for over 5 years, initially in their audit business and latterly in their corporate recovery division working on financial and operational restructurings and formal insolvencies.

Ian CurrieIan qualified as a chartered accountant in 1986 with KPMG and has been involved in corporate finance with Peel Hunt & Co, Apax Partners & Co and Altium Capital. He co-founded Zeus Group and at the point of demerger in 2010, the Group had over £350m of assets in a variety of businesses, including corporate finance, private equity, stockbroking and pension administration.

Ian KayIan has worked within a number of firms, specialising in Litigation and Contractual disputes. Ian obtained his Law Degree from the University of Hull and completed his Higher Level Diploma in Law and Practise with the then ILEX Tutorial College. He has a wide breadth of skills within these areas including advocacy, settlement negotiation and enforcement.

Siobhan PycroftSiobhan worked for two leading international law firms in Risk Management prior to Seneca. In 2009, she received a Michael Sullivan Award to attend the University of Cambridge, Jesus College and subsequently completed the Legal Practice Course. Siobhan joined Seneca in 2013, specialising in complex financial products, investments and settlement negotiation.

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Is Seneca Banking a Law Firm?


Seneca is not a law firm, but a claims management company. Seneca has legally trained members of the team, however it takes a more commercial approach to the mis-selling of products compared to law firms. It is important not to look at these complaints as a wholly legal issue. This is because it appears that the Banks respond better to a commercial proposal rather than legal representations. Seneca Banking has partnered with an experienced firm of solicitors who will pursue legal claims on behalf of our clients, at no extra cost to the client (with the potential exception of a policy of insurance to cover adverse legal fees and disbursements).

The pricing team within Seneca provides detailed pricing schedules which outline all of the direct losses as a result of entering into the GRG. Seneca is able to provide an understanding of the GRG and the alternative options at the time.

Seneca, as part of the wider group of companies, has access to people experienced in corporate finance, EIS funding and investments. This means that Seneca can assist with various issues that may be relevant to the client’s wider commercial interests. For example; if your business is suffering financial distress, it needs investment; or if a business receives a large redress amount, what could be its possible next steps?

Will you claim for my consequential losses e.g loss of property, loss of business opportunity and loss of reputation? When it comes to receiving compensation Seneca will be there to support you and to negotiate on your

behalf. It is important that any settlement offered to you by the Bank includes both direct losses and

consequential losses. Consequential losses are complex legally and factually but Seneca have access to

experts who can calculate and determine your consequential losses.

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How successful have you been?Seneca has been involved in numerous settlement agreements relating to the GRG and other financial misconduct. Seneca has experience in negotiating settlements that are beneficial for our clients and mutually acceptable to the Banks.

Seneca provides the Bank with a detailed schedule of losses, which gives us a strong position when entering into negotiations, as we know exactly the amount that you have paid since entering GRG.

Seneca are able to discuss alternative fee arrangements where necessary.


01204 322805

Seneca Banking Consultants,Ground Floor,Unit B Lostock Office Park,Lynstock Way,Lostock,Bolton,BL6 4SA

www.senecabanking.co.uk

[email protected]

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