Page 222 - Bank Case Studies

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)