Page 14 - RBS GRG F Case Study

According to various media reports, as well as a leaked
report from the Financial Conduct Authority, RBS actually

“mistreated” these companies and took advantage of
their vulnerability 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 PPFAs were just some of

the ways businesses were affected by GRG.

Between 2008 and 2013 it was claimed that

“Property Participation Fee Agreements (“PPFAs”) had a

double benefit for RBS. They were an equitable

instrument, and RBS was allowed to use PPFAs as

equitable holdings. This helped shore up RBS’s rather

below par holdings for the purposes of regulatory

requirements. It was the same as holding stocks and

shares in a company – it has a monetary value. RBS was

simply bleeding customers dry in order to make money

and to create equities that it could hold as capital, fixing
two birds with one shot. The shares in the companies

were the same. The bank could hold them and report

them as regulatory capital. That way, RBS did not have to

hold its own capital, which it could then use to help grow

the business.” (12)