Bankers' Heads Should Roll, part 94

Channel 4 had an excellent scoop last night, a whistle-blower from the RBS 'Global Restructuring Group' who told how, in the wake of 2008 many of the bank's SME clients were transferred to the tender mercies of the GRG, which then systematically ramped up substantial and spurious fees to the point where - he alleges - not a few of them went under quite needlessly.  Then their assets were seized and sold at knock-down prices to an investment arm of RBS, he claims.  Needless to say, RBS protests its innocence.  

But Mr Whistleblower's story, replete with details and background 'colour', conveyed a strong whiff of plausibility.  Perhaps one of the several inquiries into Fred Goodwin's wretched monster will get to the bottom of it all.

Did I say 'whiff' ?  Stench would be more like it - the stench of decay.  'Global restructuring' used to be an honourable capitalist calling, and was (for example) in large measure responsible for accelerating recovery from the ghastly financial chaos in the Asian & Eastern markets back in 1997-98.  Likewise, in its heyday Enron's restructuring prowess was instrumental in digging many a floundering utility and large industrial energy user out of a hole.  The creative use of derivatives and various other financial tools and tricks of the trade is a wonderful thing to behold when used to assemble a win-win package that puts a company back on its feet.  

Of course there are rewards for the restructurer: a successful restructuring deal is as great a value-added proposition as can be imagined.  But - having done a few of these transactions myself - when you have a client who is almost in tears of gratitude for the service you've done them, you know the fees have been properly earned.

The official RBS response has been to claim that's pretty much what they still do.  But what Mr Whistleblower has described is a perversion of this noble art.  If he's right, then ways should be found to lock 'em all up. 

ND