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Ulster Bank - bailed out by taxpayers, | 0:00:02 | 0:00:04 | |
now accused of pushing some businesses into bankruptcy | 0:00:04 | 0:00:09 | |
to boost the bank's balance sheet. | 0:00:09 | 0:00:11 | |
If the Ulster Bank had been prepared to work with the business, | 0:00:11 | 0:00:15 | |
those jobs could have been saved. | 0:00:15 | 0:00:17 | |
It was as if we had been attacked in our sleep. | 0:00:17 | 0:00:21 | |
A Government-commissioned report also claims the bank pushed | 0:00:21 | 0:00:24 | |
viable businesses to the wall for its own profit. | 0:00:24 | 0:00:28 | |
It's ingrained in us to trust the bank and, I think, | 0:00:28 | 0:00:31 | |
that's where people have gone wrong. | 0:00:31 | 0:00:33 | |
An insider claims that a division of the RBS Group, Ulster Bank's parent company, | 0:00:33 | 0:00:38 | |
targeted some businesses that could have survived. | 0:00:38 | 0:00:42 | |
I was directed to destroy viable businesses by the bank. | 0:00:42 | 0:00:46 | |
That was my job. I was told to do so. | 0:00:46 | 0:00:50 | |
Ulster Bank denied the allegations, | 0:00:50 | 0:00:51 | |
but questions persist about how the bank treated some business customers. | 0:00:51 | 0:00:57 | |
The fall-out from Northern Ireland's toxic debt crisis. | 0:01:19 | 0:01:23 | |
This is the company's offices here. | 0:01:23 | 0:01:26 | |
Downpatrick-based building company Polly Bros Ltd | 0:01:26 | 0:01:29 | |
went into administration in late 2009. | 0:01:29 | 0:01:33 | |
The construction company was started by my father in 1957. | 0:01:33 | 0:01:38 | |
I took over the business in the mid-'80s | 0:01:38 | 0:01:42 | |
and grew the business from there. | 0:01:42 | 0:01:44 | |
And, at one stage, it employed about 120 people. | 0:01:44 | 0:01:48 | |
What was your business ethos in terms of Polly Brothers? | 0:01:48 | 0:01:51 | |
My bankers, the Ulster Bank, always said I was a conservative customer. | 0:01:51 | 0:01:56 | |
If I wanted to buy a piece of land, I had the money to buy it, | 0:01:56 | 0:02:00 | |
I didn't need to go near the bank. | 0:02:00 | 0:02:02 | |
During the boom years, | 0:02:02 | 0:02:04 | |
according to Brian Polly, Ulster Bank was keen to lend to him. | 0:02:04 | 0:02:08 | |
The bank were very happy to lend me large sums of money, | 0:02:08 | 0:02:12 | |
but I was very apprehensive. | 0:02:12 | 0:02:15 | |
There were two sets in particular that the bank wanted me to buy. | 0:02:15 | 0:02:20 | |
They rang me up and asked me, "Come in on Monday morning, the deeds are here, | 0:02:20 | 0:02:24 | |
"and the money is here for you." | 0:02:24 | 0:02:26 | |
I said, "Boys, I'm not interested in buying that. | 0:02:26 | 0:02:29 | |
"I'm not interested. I have enough." | 0:02:29 | 0:02:31 | |
Brian Polly did, however, borrow from the bank. | 0:02:31 | 0:02:35 | |
I bought a site in a prime location in Belfast. | 0:02:35 | 0:02:39 | |
They lent me the money and then they got it revalued again after I bought it | 0:02:40 | 0:02:45 | |
and they said there was plenty of equity in it, let's go again. | 0:02:45 | 0:02:50 | |
In 2006, | 0:02:50 | 0:02:51 | |
Brian Polly's company had loans of £6 million from Ulster Bank. | 0:02:51 | 0:02:56 | |
Ulster Bank has for decades been among Northern Ireland's leading business banks. | 0:02:58 | 0:03:02 | |
In 2000, it became part of the Royal Bank of Scotland, RBS. | 0:03:03 | 0:03:08 | |
In the boom years, the bank, like others, went on a lending binge. | 0:03:09 | 0:03:14 | |
In 2007, Ulster Bank had a loan book across the island of £55 billion. | 0:03:14 | 0:03:21 | |
Ulster Bank was infected by the same culture as RBS, | 0:03:21 | 0:03:26 | |
which was that RBS basically kept on betting on future growth in the economy. | 0:03:26 | 0:03:32 | |
And Ulster Bank, in the same way, bet on an assumption | 0:03:32 | 0:03:35 | |
that you would have constant growth in property prices, both north and south. | 0:03:35 | 0:03:39 | |
It was a huge bet brought down in part by a global financial crisis. | 0:03:42 | 0:03:47 | |
This is a once-in-a-half-century, | 0:03:49 | 0:03:52 | |
probably once-in-a-century type of event. | 0:03:52 | 0:03:55 | |
They can't close the markets like that! | 0:03:55 | 0:03:57 | |
By 2008, collapse of the investment bank Lehman Brothers | 0:03:57 | 0:04:01 | |
triggered global financial turmoil. | 0:04:01 | 0:04:04 | |
Weeks into the crisis, RBS, Ulster Bank's parent company, | 0:04:04 | 0:04:08 | |
came within hours of running out of money. | 0:04:08 | 0:04:11 | |
The end of an era for British banking. | 0:04:13 | 0:04:15 | |
Some of the biggest names go cap in hand to the Government. | 0:04:15 | 0:04:19 | |
A £37 billion Government bailout | 0:04:19 | 0:04:21 | |
saved Ulster Bank's parent company, RBS, | 0:04:21 | 0:04:25 | |
along with HBOS and Lloyds TSB, from collapse. | 0:04:25 | 0:04:28 | |
The move made Ulster Bank 81% taxpayer owned. | 0:04:28 | 0:04:33 | |
For Brian Polly, it seemed, at first, nothing much had changed. | 0:04:34 | 0:04:38 | |
They were ringing me up, trying to get me to come to the Christmas party | 0:04:38 | 0:04:41 | |
after being bailed out by the UK taxpayer. | 0:04:41 | 0:04:45 | |
I point blankly refused to go. It wasn't what I stood for. | 0:04:47 | 0:04:50 | |
You cannot be bailed out by people on the street and then it's party time. No. | 0:04:51 | 0:04:57 | |
But the party was over. | 0:05:00 | 0:05:02 | |
Property values began to slide. | 0:05:02 | 0:05:05 | |
Ulster Bank was, like most UK banks, | 0:05:07 | 0:05:10 | |
extremely exposed to the property market. | 0:05:10 | 0:05:12 | |
And when the property market fell and fell dramatically, | 0:05:12 | 0:05:16 | |
it had a lot of loans which were bad, in essence. | 0:05:16 | 0:05:21 | |
A bad loan is when the value of the firm, or the company that has borrowed, | 0:05:21 | 0:05:26 | |
is actually less than the value of the loan. | 0:05:26 | 0:05:29 | |
Property prices fell by about 50%. | 0:05:31 | 0:05:33 | |
That meant that anyone who borrowed money with conditions attached to it, | 0:05:33 | 0:05:37 | |
in terms of the loan being immediately repayable | 0:05:37 | 0:05:41 | |
once the property prices fell, that meant they were stuffed, basically. | 0:05:41 | 0:05:44 | |
The small print was about to become a big deal. | 0:05:46 | 0:05:51 | |
Once the value of the underlying property, the securing the loan, | 0:05:51 | 0:05:55 | |
falls below a certain value, then the banks essentially can do what they want. | 0:05:55 | 0:05:59 | |
They own that business, in essence. | 0:05:59 | 0:06:03 | |
And so they essentially can transfer money between different accounts. | 0:06:03 | 0:06:07 | |
They essentially can put very strict conditions on what the actual business can do. | 0:06:07 | 0:06:13 | |
With so much bad debt on its books, | 0:06:13 | 0:06:15 | |
Ulster Bank was under pressure to get as much of its money back as possible. | 0:06:15 | 0:06:20 | |
It started by slimming down its loan book. | 0:06:20 | 0:06:23 | |
The practice of removing a bad debt from a bank's books is not unusual | 0:06:24 | 0:06:30 | |
and Ulster Bank has a division to deal with loans | 0:06:30 | 0:06:32 | |
that are going bad, or seen as risky. | 0:06:32 | 0:06:35 | |
It is called GRG - the Global Restructuring Group. | 0:06:35 | 0:06:39 | |
In January 2009, Brian Polly was introduced to Ulster Bank's GRG division. | 0:06:39 | 0:06:46 | |
The executive out of the Ulster Bank, he said, "We are just putting you | 0:06:46 | 0:06:50 | |
"into GR...it's only a short-term arrangement. | 0:06:50 | 0:06:53 | |
"We think the business is just a wee bit sick. | 0:06:53 | 0:06:55 | |
"It's like a wee bit of special care and you'll come out again in a month, two months' time." | 0:06:55 | 0:07:02 | |
GRG is supposed to get businesses back in shape | 0:07:02 | 0:07:06 | |
and, at the same time, protect the bank's position by minimising further losses. | 0:07:06 | 0:07:11 | |
But Brian Polly claims pressures imposed by GRG | 0:07:11 | 0:07:16 | |
tipped his company into insolvency. | 0:07:16 | 0:07:19 | |
There was an arrangement there that every time there was a house completed, | 0:07:19 | 0:07:23 | |
the bank got such a percentage per house | 0:07:23 | 0:07:25 | |
and that the remaining moneys would be left in the account to further progress the work in progress. | 0:07:25 | 0:07:33 | |
But the bank just started taking all the money. | 0:07:33 | 0:07:35 | |
There was a considerable sum of money that came in one Friday evening of almost £400,000. | 0:07:35 | 0:07:41 | |
I checked the internet banking on the Friday evening, the money was there. | 0:07:41 | 0:07:45 | |
I went into my office as usual at 6.30 on the Monday morning, everything was there. | 0:07:45 | 0:07:51 | |
Before I left, whenever I went in to make sure the money was there, | 0:07:51 | 0:07:54 | |
the money was gone. 400. Almost 400K was taken out of the account. | 0:07:54 | 0:07:59 | |
I was absolutely flabbergasted. | 0:07:59 | 0:08:02 | |
Flabbergasted. Could not... | 0:08:02 | 0:08:05 | |
The stress of that there is absolutely unbelievable. | 0:08:05 | 0:08:08 | |
It meant that it sort of very much tipped the business towards the edge. | 0:08:08 | 0:08:14 | |
Obviously, the creditors - that was the creditors' money, the suppliers, | 0:08:14 | 0:08:20 | |
people who had done work on that particular contract. | 0:08:20 | 0:08:24 | |
It took the thing into a negative state. | 0:08:24 | 0:08:27 | |
By the end of nine months in GRG, | 0:08:31 | 0:08:34 | |
Brian Polly's company was no longer in a position to pay its bills. | 0:08:34 | 0:08:38 | |
Ulster Bank told Spotlight that, following multiple petitions by creditors, | 0:08:38 | 0:08:42 | |
the company was placed into administration. | 0:08:42 | 0:08:45 | |
I put proposals to the bank on a work-out situation. | 0:08:46 | 0:08:49 | |
I had employed professional people to help me do that. | 0:08:49 | 0:08:52 | |
Er, the bank just wasn't prepared to listen. | 0:08:52 | 0:08:56 | |
Brian Polly is convinced that he had a worthwhile business. | 0:08:56 | 0:09:00 | |
This here was another design-and-build scheme. | 0:09:00 | 0:09:03 | |
We built, I think, 270 houses there. | 0:09:03 | 0:09:07 | |
But that didn't matter to anyone. It didn't matter. | 0:09:07 | 0:09:11 | |
There were 45 people directly employed. They lost their jobs. | 0:09:11 | 0:09:15 | |
If the Ulster Bank had been prepared to work with the business, | 0:09:15 | 0:09:19 | |
those jobs could have been saved. | 0:09:19 | 0:09:21 | |
Because I had a number of design-and-build schemes lined up. | 0:09:21 | 0:09:25 | |
Brian Polly wanted to trade his way out of trouble, | 0:09:25 | 0:09:28 | |
but, in the wake of its bailout, the bank had a mandate | 0:09:28 | 0:09:32 | |
to rebalance its books and address so-called bad loans - | 0:09:32 | 0:09:36 | |
liabilities that were now underwritten by taxpayers. | 0:09:36 | 0:09:41 | |
What effect has the loss of your business had on you? | 0:09:41 | 0:09:44 | |
It is like letting off a hand grenade in the middle of you. You are completely devastated. | 0:09:44 | 0:09:49 | |
I sometimes think, "Was it all my fault?" | 0:09:49 | 0:09:55 | |
How come I've ended up here after working so hard? | 0:09:55 | 0:09:59 | |
Another casualty of the downturn was Michael Taggart, | 0:10:01 | 0:10:04 | |
whose firm Taggart Holdings collapsed in 2008. | 0:10:04 | 0:10:09 | |
He also alleges that the actions of Ulster Bank | 0:10:09 | 0:10:12 | |
contributed to the failure of his construction and property development company. | 0:10:12 | 0:10:17 | |
In June 2007, Ulster Bank refused to pay cheques made out by the company. | 0:10:18 | 0:10:25 | |
The cheques were stopped out of the blue. There was no warning. | 0:10:25 | 0:10:30 | |
There were no e-mails, there wasn't anything. | 0:10:30 | 0:10:33 | |
It was as if we had been attacked in our sleep. | 0:10:33 | 0:10:37 | |
The bank claims that a Taggart company had breached | 0:10:37 | 0:10:40 | |
the terms of a loan agreement, but Michael Taggart disputes this. | 0:10:40 | 0:10:44 | |
Our business was sitting with in excess of 20 million on deposit. | 0:10:44 | 0:10:49 | |
We had about £650 million of assets. | 0:10:49 | 0:10:53 | |
We had £250 million of borrowing. | 0:10:53 | 0:10:56 | |
The Ulster Bank had less than 10% of that borrowing. | 0:10:56 | 0:11:00 | |
Michael Taggart alleges that Ulster Bank's actions immediately damaged his company's credibility. | 0:11:00 | 0:11:07 | |
Months later, the value of his company's assets decreased rapidly | 0:11:07 | 0:11:11 | |
when the property market crashed. | 0:11:11 | 0:11:14 | |
You understand that when you took those loans from the bank, | 0:11:14 | 0:11:18 | |
that there was a small print that they could call in those loans? | 0:11:18 | 0:11:23 | |
I wish they had called in the loans in June '07, because, if they had, | 0:11:23 | 0:11:26 | |
we could have paid them. That is what I wanted to do. | 0:11:26 | 0:11:29 | |
But they led us to believe we don't need to do that. | 0:11:29 | 0:11:33 | |
That was the mistake I made, that I did believe them. | 0:11:33 | 0:11:36 | |
Ulster Bank declined to comment because of an ongoing legal case | 0:11:38 | 0:11:41 | |
between Michael, his brother John and the bank. | 0:11:41 | 0:11:45 | |
It is a big task to take on a bank, | 0:11:46 | 0:11:49 | |
which is why most people roll over and say, "OK, do what you want." | 0:11:49 | 0:11:53 | |
I do what I believe in. | 0:11:53 | 0:11:55 | |
Part of their legal case is centred on personal guarantees | 0:11:55 | 0:11:59 | |
for borrowings by Taggart Holdings. | 0:11:59 | 0:12:02 | |
It wasn't good enough that they destroyed the business, then they | 0:12:02 | 0:12:05 | |
had to try to take us out personally and completely finish the job. | 0:12:05 | 0:12:10 | |
It is nothing more than blood sport. It is just blood sport. | 0:12:10 | 0:12:14 | |
Several business owners contacted Spotlight, | 0:12:14 | 0:12:17 | |
alleging that Ulster Bank's GRG division pushed their business | 0:12:17 | 0:12:21 | |
to the brink of bankruptcy and, in some cases, into insolvency. | 0:12:21 | 0:12:25 | |
They all spoke of the enormous strain being put on them, but would not go public | 0:12:25 | 0:12:30 | |
because, they said, they are scared of the bank. | 0:12:30 | 0:12:33 | |
Spotlight wanted to speak to Ulster Bank's chief executive | 0:12:34 | 0:12:37 | |
about the bank's treatment of business customers. | 0:12:37 | 0:12:41 | |
It is Jennifer O'Leary here again, from BBC Spotlight. | 0:12:41 | 0:12:45 | |
I am aware you have previously indicated there is nobody from Ulster Bank, | 0:12:45 | 0:12:49 | |
including the chief executive, Jim Brown, available to interview. | 0:12:49 | 0:12:52 | |
If you could get back to me, I'd be very grateful. | 0:12:52 | 0:12:55 | |
We first asked Ulster Bank for an interview five weeks ago now. | 0:12:55 | 0:12:59 | |
And at different times making the programme, | 0:12:59 | 0:13:01 | |
we've asked the bank to consider putting a spokesperson, | 0:13:01 | 0:13:05 | |
if not the chief executive, forward to speak to us. | 0:13:05 | 0:13:08 | |
But they declined to do so. | 0:13:08 | 0:13:09 | |
They did provide statements through their lawyers, in which they say | 0:13:09 | 0:13:13 | |
treating all customers fairly is at the core of what they do. | 0:13:13 | 0:13:18 | |
It's a consistent message. | 0:13:18 | 0:13:20 | |
In 2010, Henry Elvin, the bank's then head of business banking | 0:13:20 | 0:13:25 | |
told a Stormont committee that Ulster Bank was on the side of its business customers. | 0:13:25 | 0:13:31 | |
I sat in a meeting this morning where we had ten difficult customers. | 0:13:31 | 0:13:35 | |
If we wanted to be difficult, | 0:13:35 | 0:13:36 | |
we would have put receivers into half those customers. We didn't. | 0:13:36 | 0:13:40 | |
So the banks, and I can only speak for Ulster Bank, and the other guys can speak, | 0:13:40 | 0:13:45 | |
the banks are giving these guys every chance. | 0:13:45 | 0:13:48 | |
But RBS and Ulster Bank's treatment of business customers is under scrutiny. | 0:13:48 | 0:13:54 | |
Sports car manufacturer Lawrence Tomlinson was a Government adviser when he was commissioned last year | 0:13:54 | 0:14:00 | |
by Business Secretary Vince Cable to write a report on bank lending. | 0:14:00 | 0:14:04 | |
His report made a number of damning allegations about GRG. | 0:14:06 | 0:14:11 | |
It was really shocking. | 0:14:11 | 0:14:13 | |
In fact, some of the first cases that came to me | 0:14:13 | 0:14:16 | |
were actually from Ulster Bank. | 0:14:16 | 0:14:17 | |
Businesses saying, "Not can we not get access to finance, | 0:14:17 | 0:14:22 | |
"but our finances are being taken away from us and we are being distressed | 0:14:22 | 0:14:27 | |
"and we are losing jobs and we are being shut down by this GRG." | 0:14:27 | 0:14:32 | |
The Ulster Bank customers who spoke to Spotlight on camera | 0:14:32 | 0:14:37 | |
did not make contact with Lawrence Tomlinson ahead of his report. | 0:14:37 | 0:14:40 | |
In it, he accused the bank of forcing some good and viable businesses to collapse, | 0:14:40 | 0:14:47 | |
so as to make more profit. | 0:14:47 | 0:14:50 | |
Businesses that had a future were put into this business support unit, | 0:14:50 | 0:14:54 | |
called GRG, on the pretence that they would be helped. | 0:14:54 | 0:14:59 | |
There were really huge fees charged immediately. | 0:14:59 | 0:15:04 | |
Their facilities were shrunken. | 0:15:04 | 0:15:07 | |
They caused distressed. | 0:15:07 | 0:15:10 | |
They had some kind of independent business review that cost them a lot of money. | 0:15:10 | 0:15:15 | |
It seems, in these instances, that GRG has acted just to be a profit centre | 0:15:15 | 0:15:20 | |
and make as much money for the bank as possible. | 0:15:20 | 0:15:24 | |
The Tomlinson Report also claimed | 0:15:24 | 0:15:26 | |
there were instances of businesses having their assets revalued without consultation | 0:15:26 | 0:15:32 | |
and then being told they were in breach of their loan conditions, | 0:15:32 | 0:15:36 | |
which triggered the bank calling in personal guarantees. | 0:15:36 | 0:15:40 | |
Personal guarantees could be their family home, | 0:15:40 | 0:15:43 | |
it could be agricultural land. | 0:15:43 | 0:15:46 | |
Once the loan covenants are breached, | 0:15:46 | 0:15:48 | |
then the bank can move against and call in the personal guarantee. | 0:15:48 | 0:15:52 | |
What GRG did, allegedly, and there is a lot of evidence behind this, | 0:15:52 | 0:15:56 | |
is that GRG said if it liked the assets, | 0:15:56 | 0:15:58 | |
it would take over the assets through a complex process | 0:15:58 | 0:16:01 | |
by putting the company into administration. | 0:16:01 | 0:16:04 | |
And that is where we have the serious problems with GRG. | 0:16:04 | 0:16:06 | |
That's particularly affected Northern Ireland, | 0:16:06 | 0:16:09 | |
with a lot of Ulster Bank customers having their assets recovered | 0:16:09 | 0:16:12 | |
through this rather painful process. | 0:16:12 | 0:16:14 | |
Ulster Bank called in Brian Polly's personal guarantees in 2010. | 0:16:15 | 0:16:21 | |
I had a farm here that I particularly enjoyed at the weekends, you know. | 0:16:21 | 0:16:26 | |
I always loved walking over my farm at the weekend | 0:16:26 | 0:16:28 | |
and they got it. The first thing I knew about my farm being up for sale | 0:16:28 | 0:16:33 | |
was there was a signpost put at the end of the road and it was a shock. | 0:16:33 | 0:16:37 | |
Strangers came round to look around the farm and I was absolutely devastated. | 0:16:39 | 0:16:44 | |
I had invested in five houses for my kids. | 0:16:44 | 0:16:47 | |
But, er, the bank got them all. | 0:16:47 | 0:16:50 | |
They probably saw it as a soft company to go after, you know, and grab the assets. | 0:16:54 | 0:16:59 | |
We would have liked to have interviewed the bank about these claims. | 0:17:00 | 0:17:04 | |
We have, however, made contact with an RBS insider. | 0:17:07 | 0:17:11 | |
He worked for a number of years in a GRG division, | 0:17:11 | 0:17:14 | |
although not with Ulster Bank clients. | 0:17:14 | 0:17:17 | |
I'm on my way to meet with the insider who's agreed | 0:17:17 | 0:17:20 | |
to speak to Spotlight on the basis of anonymity. | 0:17:20 | 0:17:23 | |
He did not deal with businesses in Northern Ireland, | 0:17:25 | 0:17:28 | |
but he says he has first-hand experience of working in GRG at RBS, | 0:17:28 | 0:17:33 | |
Ulster Bank's parent company. | 0:17:33 | 0:17:36 | |
GRG was a global division which takes care of all subsidiary RBS banks. | 0:17:36 | 0:17:42 | |
Is GRG the same in how it operates in Belfast, London, Dublin or Edinburgh? | 0:17:42 | 0:17:49 | |
Yes. Every different bank within the UK, | 0:17:49 | 0:17:52 | |
Northern Ireland, Ireland, it's all done exactly the same. | 0:17:52 | 0:17:55 | |
Our main remit was to collect as much money as possible from clients to help the bank. | 0:17:55 | 0:18:03 | |
The insider says that GRG staff intercepted payments | 0:18:03 | 0:18:07 | |
being made to companies regardless of the consequences. | 0:18:07 | 0:18:10 | |
We would always watch the accounts. | 0:18:10 | 0:18:13 | |
It would be on our screens all the time. | 0:18:13 | 0:18:15 | |
Several different clients. | 0:18:15 | 0:18:17 | |
We'd see interactions between them and their customers, | 0:18:17 | 0:18:20 | |
or their creditors and, often, we would siphon that money off to our account and call it a debt. | 0:18:20 | 0:18:27 | |
I remember a senior manager in our team was doing a transaction like that, | 0:18:30 | 0:18:34 | |
and he was working with another colleague from a few desks down, | 0:18:34 | 0:18:38 | |
and he stood up and punched the air | 0:18:38 | 0:18:40 | |
and said something along the lines of, "Fantastic, we have it!" | 0:18:40 | 0:18:44 | |
The money had come in and it was grabbed, so to speak. | 0:18:46 | 0:18:49 | |
Any cash that we can possibly get our hands on to make our position better, | 0:18:51 | 0:18:56 | |
we would get our hands on it. | 0:18:56 | 0:18:57 | |
Even if that cash had been set aside | 0:18:57 | 0:18:59 | |
and you had been told by the businesses? | 0:18:59 | 0:19:03 | |
They say, "That money is to pay revenue." | 0:19:03 | 0:19:05 | |
It didn't matter. We were the bankers. | 0:19:05 | 0:19:08 | |
But you were the bank that was saved by taxpayers. | 0:19:08 | 0:19:11 | |
To be frank, most people don't even care about that, | 0:19:11 | 0:19:14 | |
they're bankers before they're members of the UK. | 0:19:14 | 0:19:17 | |
Of course, it was one of GRG's jobs to minimise losses | 0:19:18 | 0:19:22 | |
for the now majority taxpayer-owned bank. | 0:19:22 | 0:19:26 | |
However, the insider claims that profit took priority over small firms that had a future. | 0:19:26 | 0:19:32 | |
Did you, as part of your role in GRG, | 0:19:33 | 0:19:37 | |
did you deliberately push businesses into insolvency? | 0:19:37 | 0:19:41 | |
Yes. I was directed to destroy viable businesses by the bank | 0:19:41 | 0:19:46 | |
and that was my job. I was told to do so. | 0:19:46 | 0:19:50 | |
You're appraised on how much fees you brought in every week | 0:19:50 | 0:19:53 | |
and, of course, you were bought a beer by one of your managers for a job well done. | 0:19:53 | 0:19:57 | |
The insider did not deal with the Ulster Bank customers who spoke to Spotlight, | 0:19:57 | 0:20:02 | |
but he says there was an awareness of the stress some customers in GRG were under. | 0:20:02 | 0:20:08 | |
People were crying. | 0:20:08 | 0:20:10 | |
They were pleading with us to put the money back into the account, or stop taking the fees out. | 0:20:10 | 0:20:16 | |
They'd ask us not to target their business, | 0:20:16 | 0:20:18 | |
which is essentially what we were doing, unfortunately. | 0:20:18 | 0:20:22 | |
If the business had a large number of concrete assets we'd want, | 0:20:23 | 0:20:26 | |
we'd simply shove the business into an insolvency position. | 0:20:26 | 0:20:29 | |
Did you deliberately target businesses that were asset-heavy? | 0:20:29 | 0:20:35 | |
Yes. | 0:20:35 | 0:20:36 | |
If we had those businesses and assets, say houses, properties, | 0:20:36 | 0:20:41 | |
cars, or anything, we could then sell those onwards to make a profit. | 0:20:41 | 0:20:46 | |
RBS and Ulster Bank have a dedicated property division. | 0:20:46 | 0:20:50 | |
It's called West Register. | 0:20:50 | 0:20:53 | |
The Tomlinson Report raised the concern | 0:20:53 | 0:20:55 | |
that some businesses in GRG subsequently had their assets sold | 0:20:55 | 0:21:00 | |
to West Register at a discounted price. | 0:21:00 | 0:21:04 | |
The customers are being dealt with by GRG on one set of desks, | 0:21:04 | 0:21:08 | |
and then the property ends up being owned by West Register. | 0:21:08 | 0:21:12 | |
If you were a customer who goes into GRG, | 0:21:12 | 0:21:16 | |
are you getting the best value for your property, | 0:21:16 | 0:21:19 | |
if it's bought by the bank who is putting you in distress? | 0:21:19 | 0:21:23 | |
The GRG insider claims that he worked closely | 0:21:24 | 0:21:28 | |
with his colleagues in West Register, the bank's property unit. | 0:21:28 | 0:21:32 | |
We sat 30ft away from them. | 0:21:33 | 0:21:36 | |
We could yell out to West Register to come down and look at a case, if we wanted them to. | 0:21:36 | 0:21:42 | |
You would usually pick up a case file and walk down to West Register, | 0:21:42 | 0:21:46 | |
or they could come and see you under the guise of making it more secure for the bank. | 0:21:46 | 0:21:51 | |
The chief executive of RBS, Ulster Bank's owners, admitted | 0:21:52 | 0:21:57 | |
that the reputation of the bailed-out bank had been seriously damaged | 0:21:57 | 0:22:01 | |
by the allegation that it deliberately wrecked small firms in the pursuit of profit. | 0:22:01 | 0:22:07 | |
He said there was no evidence to back up that claim. | 0:22:07 | 0:22:10 | |
But, nonetheless, the bank hired the law firm Clifford Chance | 0:22:10 | 0:22:14 | |
to investigate the claims made in the Tomlinson Report. | 0:22:14 | 0:22:18 | |
The review covered RBS in Britain and Ulster Bank in Northern Ireland. | 0:22:18 | 0:22:23 | |
The Clifford Chance report supported the bank's contention | 0:22:23 | 0:22:27 | |
that they hadn't deliberately targeted or wrecked small businesses for profit. | 0:22:27 | 0:22:31 | |
Indeed, the report went further. | 0:22:32 | 0:22:35 | |
The Clifford Chance report found there was no evidence of fraudulent activity, | 0:22:35 | 0:22:40 | |
but Lawrence Tomlinson said his report never accused the bank of fraud. | 0:22:40 | 0:22:45 | |
He said a number of the Clifford Chance findings | 0:22:45 | 0:22:48 | |
tallied with the central themes of his report. | 0:22:48 | 0:22:51 | |
For example, the lack of transparency over fees | 0:22:51 | 0:22:54 | |
and the need for an improved business culture in GRG. | 0:22:54 | 0:22:57 | |
The City of London is home to the lobby group Bully Banks. | 0:23:02 | 0:23:05 | |
Their spokesperson, Jeremy Roe, is highly critical of the Clifford Chance investigation. | 0:23:05 | 0:23:11 | |
You have a bank instruct a solicitor, | 0:23:12 | 0:23:17 | |
who it frequently instructs on other matters, | 0:23:17 | 0:23:20 | |
to carry out an investigation into its practices. | 0:23:20 | 0:23:25 | |
The report, I think, could have been written by a bank, actually. | 0:23:25 | 0:23:28 | |
It's got that sort of feel to it. | 0:23:28 | 0:23:31 | |
It doesn't appear to be an incisive investigative report. | 0:23:31 | 0:23:36 | |
Ulster Bank told Spotlight that Clifford Chance were instructed | 0:23:36 | 0:23:39 | |
to report on an independent and objective basis | 0:23:39 | 0:23:43 | |
and the review was led by a team that had no previous dealings with GRG matters. | 0:23:43 | 0:23:48 | |
But RBS and Ulster Bank's GRG division remain in the spotlight. | 0:23:50 | 0:23:54 | |
GRG's activities are still the subject of an ongoing review | 0:23:56 | 0:24:00 | |
with a financial regulator. | 0:24:00 | 0:24:02 | |
The Financial Conduct Authority, based here in London, has appointed two outside firms | 0:24:02 | 0:24:08 | |
to investigate RBS's treatment of business customers in financial difficulty. | 0:24:08 | 0:24:14 | |
The Bank of England told Spotlight that it is also working | 0:24:15 | 0:24:19 | |
with the FCA to examine the details of the report. | 0:24:19 | 0:24:23 | |
I've had over 1,000 businesses contact me. | 0:24:23 | 0:24:25 | |
I've no idea how many cases there could be, | 0:24:25 | 0:24:28 | |
but it is a really considerable number of cases that the FCA are investigating now. | 0:24:28 | 0:24:34 | |
Meanwhile, the Serious Fraud Office told Spotlight | 0:24:37 | 0:24:41 | |
that they continue to monitor developments. | 0:24:41 | 0:24:43 | |
So criminal proceedings cannot be ruled out. | 0:24:43 | 0:24:47 | |
RBS recently announced plans to sell off its controversial West Register property portfolio. | 0:24:47 | 0:24:54 | |
Explaining the move, the bank said there was a damaging perception | 0:24:54 | 0:24:58 | |
that the bank had a conflict of interest | 0:24:58 | 0:25:00 | |
when it purchased a property as part of a restructuring process. | 0:25:00 | 0:25:04 | |
Ulster Bank told us that West Register in Northern Ireland | 0:25:04 | 0:25:09 | |
holds properties that were previously owned by 14 Ulster Bank NI customers. | 0:25:09 | 0:25:15 | |
The bank said that, in many cases, the properties were marketed openly | 0:25:15 | 0:25:18 | |
and that West Register was the highest bidder. | 0:25:18 | 0:25:22 | |
But Ulster Bank declined to confirm whether or not the properties had been part of businesses | 0:25:22 | 0:25:29 | |
previously in the global restructuring group GRG. | 0:25:29 | 0:25:33 | |
Spotlight asked Ulster Bank if it was concerned | 0:25:33 | 0:25:37 | |
about any possible conflicts of interest, given that we know | 0:25:37 | 0:25:41 | |
of two bank executives who are also the directors of private property companies in Northern Ireland. | 0:25:41 | 0:25:49 | |
Ulster Bank told us, as well, that all conflicts are managed | 0:25:49 | 0:25:52 | |
in accordance with its existing code of conduct. | 0:25:52 | 0:25:56 | |
We asked the bank for a copy of that code of conduct, | 0:25:56 | 0:25:59 | |
but, instead, the bank simply referred us to previous statements | 0:25:59 | 0:26:03 | |
in which it had already made that point. | 0:26:03 | 0:26:06 | |
But Jeremy Roe says the situation is of concern. | 0:26:07 | 0:26:10 | |
Would I, as an employee of RBS, conduct myself as a director of a third-party company? No. | 0:26:12 | 0:26:19 | |
Would I allow anybody who worked for me, if I was a senior manager with RBS, to do that? No. | 0:26:19 | 0:26:25 | |
Ulster Bank told Spotlight they continue to strongly refute | 0:26:25 | 0:26:30 | |
the accusations made by Lawrence Tomlinson. | 0:26:30 | 0:26:33 | |
The bank's chief executive, Jim Brown, recently made the same point | 0:26:33 | 0:26:36 | |
to Stormont's Finance Committee. | 0:26:36 | 0:26:38 | |
Mr Tomlinson hasn't contacted me. | 0:26:38 | 0:26:41 | |
He has not written to me, nor phoned me. | 0:26:41 | 0:26:44 | |
He hasn't sent any evidence around any cases regarding Ulster Bank. | 0:26:44 | 0:26:49 | |
I think Ulster Bank's denial of anything being wrong | 0:26:49 | 0:26:53 | |
is just ostrich-like in sticking their head in the sand. | 0:26:53 | 0:26:58 | |
I'm happy to meet Jim Brown. I'm happy to discuss the cases that are specific to him. | 0:26:58 | 0:27:03 | |
Responsibility for banking is not devolved to Stormont. | 0:27:03 | 0:27:07 | |
Westminster's Northern Ireland Affairs Committee | 0:27:07 | 0:27:10 | |
is conducting an inquiry into the banking system here. | 0:27:10 | 0:27:14 | |
Remember, Ulster Bank aren't answerable to anybody here. | 0:27:14 | 0:27:17 | |
The first time Ulster Bank really had to answer questions on any of this | 0:27:17 | 0:27:20 | |
was when it came before the Select Committee. | 0:27:20 | 0:27:22 | |
It effectively got away in the breeze, able to hide under the coat tails of RBS, | 0:27:22 | 0:27:26 | |
when RBS were being investigated for the greater problems that they had created. | 0:27:26 | 0:27:30 | |
Despite their ongoing legal case, | 0:27:32 | 0:27:35 | |
the Taggart brothers have, in recent months, raised money from private investors. | 0:27:35 | 0:27:40 | |
This site is outside Limavady. | 0:27:40 | 0:27:42 | |
We are going to build out the site. | 0:27:42 | 0:27:46 | |
This is the first development since 2008 that we have been involved in. | 0:27:46 | 0:27:50 | |
How does it feel being back on sites? | 0:27:50 | 0:27:53 | |
It feels great getting back at it | 0:27:53 | 0:27:55 | |
and we have every intention of keeping going and being as successful as we ever were. | 0:27:55 | 0:28:00 | |
Four years on and Brian Polly's company is still being run | 0:28:01 | 0:28:04 | |
by administrators appointed by the bank. | 0:28:04 | 0:28:08 | |
Most companies are wounded up after six weeks. | 0:28:08 | 0:28:10 | |
Four years later, my business is still going. | 0:28:10 | 0:28:14 | |
I find that incredible. | 0:28:14 | 0:28:16 | |
Brian is dealing with the personal impact of bankruptcy. | 0:28:16 | 0:28:19 | |
It's very humiliating, you know. | 0:28:19 | 0:28:22 | |
I was an extremely proud man. I loved to pay my people on time, you know. | 0:28:22 | 0:28:26 | |
It was... If you don't have honour and integrity in business, you have nothing. | 0:28:26 | 0:28:32 | |
Despite the setbacks, Brian is determined to get back in business. | 0:28:32 | 0:28:37 | |
There is light at the end of the tunnel. | 0:28:37 | 0:28:39 | |
I look forward to the day - back in business again | 0:28:39 | 0:28:45 | |
and doing what I do best. | 0:28:45 | 0:28:47 | |
Ulster Bank recently posted its first quarterly profit in five years. | 0:28:47 | 0:28:52 | |
Its owners, RBS, have also returned to profit. | 0:28:52 | 0:28:56 | |
But the insider alleges the upturn has come at a cost to some. | 0:28:56 | 0:29:01 | |
There are many businesspeople who did not come out of the GRG process | 0:29:02 | 0:29:08 | |
and they blame themselves for what happened to their businesses. | 0:29:08 | 0:29:11 | |
The majority of them, they became, unfortunately, | 0:29:11 | 0:29:15 | |
a casualty of war in our bid to make the bank more liquid. | 0:29:15 | 0:29:20 | |
I think that if you put RBS and Ulster Bank and GRG and West Register together, | 0:29:20 | 0:29:26 | |
this represents the worst banking scandal, within the UK, of all the banking scandals. | 0:29:26 | 0:29:31 | |
Ulster Bank was bailed out by taxpayers because it was part of a group that was too big to fail. | 0:29:33 | 0:29:39 | |
Now it stands accused of failing some of its customers | 0:29:39 | 0:29:42 | |
and the question remains - was Ulster Bank's approach prudent, | 0:29:42 | 0:29:47 | |
or predatory in the pursuit of profit? | 0:29:47 | 0:29:51 |