Bailed-Out RBS Systemically Forged Customer Signatures: Whistle-Blowers

Small-business customers suffered most at the bank’s hands.

By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.

The Royal Bank of Scotland, the UK mega-lender that has already cost British taxpayers over £90 billion in bailouts, losses, fines and legal fees, could be about to face its biggest scandal yet following allegations staff were routinely “trained” to forge customer signatures.

First, managers were taught how to fake the names on key customer documents, according to whistle-blowers at the bank, cited by the Scottish Mail on Sunday. Staff were then allegedly shown how to download authentic signatures from the bank’s online system, trace them on to new documents by holding them against a window and to photocopy the paperwork a number of times, to “obscure the image somewhat” and thus avoid detection — a blatantly criminal practice that allegedly became commonplace throughout the bank to speed up processing.

The latest allegations are further confirmation of just how poisoned a legacy the pre-crisis management team left behind at the bank. Obsessed with achieving rapid growth at just about any cost, executives “bred a culture of impunity that affected most aspects of [RBS’] business,” says British financial journalist Ian Fraser.

Fraser was one of the first journalists to expose how some of the bank’s employees edited minutes of telephone conversations with customers to avoid the bank having to shell out compensation for misselling insurance products. At one point as many as 1,000 employees at RBS’s investment banking division (nearly a tenth of its back-office staff) were solely engaged in data-clean up and reconciliation — i.e., doctoring or recreating documents, such as loan and derivatives contracts, in ways that suited the bank and often undermined the position of counterparties.

It was small business customers that suffered most at RBS’ hands. The bank’s Global Restructuring Group, which was supposed to help turn compromised business customers around, did everything it could to push them over the edge in order to raise quick funds during the financial crisis. Two weeks ago, a government inquiry into the scandal published a tip sheet written by a GRG manager that included points such as “Rope: sometimes you just have to let customers hang themselves.”

The GRC deliberately “knee-capped” business customers they didn’t particularly like, through various techniques such as phony valuations or misselling them deadly interest rate swaps, so that the bank could pretend they were in breach of conduct, says Fraser. Then, as a favor to a larger company it valued much more, the group would sell it the smaller company or its remaining assets at a discount and pocket the change. In this manner the group is alleged to have wiped out thousands of smaller companies at the height of the financial crisis.

Top executives at the bank say they will “no longer fight” the conclusions and recommendations of the government’s “withering” independent review of mistreatment of small business customers by the bank, the FT reports today. In other words, the senior bankers finally admit that the bank defrauded its small business customers.

For the moment the same executives deny any systemic document tampering. But if irrefutable evidence emerges, they may be forced to walk back those denials, too. And a fresh new round of legal action can begin.

The latest allegations of fraud could turn out to be the tip of a very large and dangerous iceberg, Fraser warns. If the practice of forging signatures was as widespread as the whistle-blowers contend, there’s a risk, albeit small, that a court will decree all contracts between RBS and its customers null and void, which could tip the lender over the edge. Such an outcome may seem preposterous, but so too was the notion that a high street bank would systematically forge its customers’ signatures. Until today.

Arguably the biggest tragedy in all of this, besides all the small businesses wiped out by the bankers’ greed, is that the worse the RBS saga gets, the more expensive it becomes for British taxpayers, almost none of whom had anything to do with the bank’s fraudulent practices. Some taxpayers were even victims of the fraud yet still have to help fund the bank’s continued survival, which is getting more and more costly as time goes on.

The British State owns 81% of RBS. Since receiving a £45 billion bailout 10 years ago, at the very beginning of the financial crisis, the bank has racked up further losses of £58 billion. With taxpayers owning an 81% stake, their part of the losses amount to £47 billion — meaning that the total cost of its disastrous lending, over-paying for takeovers, fines and legal bills actually tops £90 billion. With little sign of RBS turning an annual profit any time soon, the accumulated losses are expected to continue to grow while doubts still remain about just how accurately RBS prices its assets.

RBS’ ongoing trials and tribulations are a stark reminder of just how little road has been traveled since the last financial crisis and how deeply vulnerable the UK’s banking system — and with it, the broader economy — remains to another downturn, just at a time that the potential warning signs of another crisis are beginning to flash. By Don Quijones.

“Not another Carillion,” said the UK government to soothe frazzled nerves, as an entire industry is teetering. Read… Crash of Outsourcing Giant with 70,000 Employees Globally Sparks New Panic

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  40 comments for “Bailed-Out RBS Systemically Forged Customer Signatures: Whistle-Blowers

  1. Salemone says:

    At the very least.

  2. bev says:

    The US fed reserve provided funds to prop up this entity in 2007 as it did the pure as snow Canadian big banks post 2008 which of course our govt denies despite a record on Hansard.
    Take away this appears to be sort of a global practice. Eg Wells Fargo items.

  3. Tom Welsh says:

    “For the moment the same executives deny any systemic document tampering”.

    Should that matter? Someone accused of criminal offences cannot exonerate himself solely by denial. The court goes by the balance of evidence.

  4. James McFadden says:

    No mention of bankers being arrested for fraud.

    • Tom Stone says:

      It’s not a crime if a Banker does it.
      And the bonuses were sweet.
      Here in the USA this sort of thing could NEVER HAPPEN!
      Oh, wait.

    • intosh says:

      Why would banksters be arrested for doing business as usual?

      Besides, like in organized crime, a few grunts will bite the dust but the alibi of ignorance will protect the crime bosses.

  5. Rates says:

    It’s obvious that GB should be made into a communist state. All the private shit does not work.

    Oh wait, this is public right?

    LOL. NOTHING can ever work in the Western world. Society is too corrupt top down, bottoms up, etc, etc.

    • Robert says:

      Here in America we have numerous, and frequently lengthy, prison sentences for (i) low-level drug offenders (ii) non-violent offenders (iii) some kinds of repeat offenders and (iv) (not yet) dangerous juveniles.

      In parallel we have almost NO SENTENCES for Banksters and other white-collar criminals. In the 1980s, many bankers were jailed after the S&L meltdown — but under Bush II, and especially Obama/Holder, NO BANKSTERS WERE JAILED after the entire system ( according to Paulsen, Bernanke, et al ) was about to FAIL.

      In college I learned a lot of Latin Legal Phrases that I now mostly forget. Nulla poene sine lege (no punishment without a law) — Nulla lex nulla iniuria (no law no wrong) — lots of them. Just the first one stayed in my head.

      ONE OF THEM WAS THIS, I forget the Latin, ¨If there is no punishment, then there is no crime¨. Effectively speaking, never punishing legislated crimes cancels the law.

      Bankers OWN the government, they are the primo elites (higher than Hollywood, even) and thus are completely above the law. They are not punished in the decades following the conclusion of the S&L crisis.

      Disadvantaged young men have their lives PERMANENTLY DESTROYED when the law is strictly applied to their ¨Transgressions¨. When the Banksters transgress, they use their hundreds of millions of profits to buy another Hampton cottage, or another 100 foot skiff.

      The Banksters have owned every president in recent decades, bar none. Promising change, by any of them, MEANS NOTHING !

      This stops when we elect an honest government that can not be bought.

      • William Smith says:

        All your points are very valid but you cannot elect an “honest government” because all the major parties of every country (obviously Scotland too) are bought. I also suspect that even politicians who try to be honest are blackmailed or extorted in some way. The bankster have very deep pockets of *other*people’s*money* which they use happily. The great social experiment of communism and capitalism has showed that communism has failed and it would be only the most ignorant of persons who would deny that capitalism is failing: through *exactly* the same mechanism that communism failed. Rampant and systemic Corruption as shown by the likes of RBS and Wells Fargo. How many other banks are in this exact position but have managed to keep the cover up going? Perhaps the chinese with their curious mix of communism and commerce might be in a better boat; but maybe not. I despair that the situation is beyond hope. History teaches us that only bloody violence will remove such entrenched corruption. American citizens need their guns for the same reasons as during Boston Tea Party (the banksters are the ones taxing/ruling you without your representation). Freedom is fought for, not given.

        • intosh says:

          Why is it a “curious mix”? The rigidity of purity is what dooms any ideology. Any sustainable and effective system dealing with humans should be a mix, a hybrid of different mechanisms, often changing and adapting to the pulse of human society. In fact, as history shows, leaning too much toward a particular system will only lead to an unavoidable return of the pendulum so to speak, initiated by crisis, revolt and revolution.

          (Not saying China has the correct mix though.)

      • intosh says:

        “This stops when we elect an honest government that can not be bought.”

        That would be like antelopes waiting that the big predators ruling the jungle turn vegetarian.

        The rule of the game is that honest policitians have little chance taking power. And even if they reach the top, their hands will be tied. Big Money can manufacture crisis that would test the masses’ resolve, which will break, that in turn would topple any honest government.

    • Javert Chip says:

      Well, for people uninfected with experience, Venezuela (highly unlikely they’ve visited) always looks better, where starving to death is a cool thing for you & your kids to do

      Visited Cuba late last year…stunning to actually see communism in action. Every snowflake should have to go see it up close & personal.

  6. TheDona says:

    Great reporting. The senior bankers need life in prison and a fierce clawback of assets. Unfortunately most of their assets are most likely safely tucked in offshore accounts and the spouse and kids will have access.

    At his point in time passports need to be seized.

    • Javert Chip says:

      Absolutely agree. And the bank itself should be found to be a “criminal enterprise”.

      All senior managers fired, but branch staff (75% of staff) sold to other banks. Tellers shouldn’t be held accountable for senior manager corruption.

  7. Frederick Demetrius says:

    I believe it was an (ex?) RBS chief executive who once sent an e-mail to employees that read: If you are not cheating, you are not trying hard enough.

  8. Justme says:

    Wow. Forging signatures. It’s not a crime when a bank does it (TM).

  9. A school for forgers? Is this The Sting?

  10. Realist says:

    Mmmh, since the collapse during the early ’90s I’ve learned 2 things:

    1. however nice the clerk behind the bank’s teller is, his/hers first goal is to help the bank to profit. If the customer happens to profit on the deal, well, things happen
    2. If you are small and do hit hard times, the bank is quick to take you out behind the shed ….

    Seems that these 2 rules of thumb do apply accurately to RBS, too.

  11. So if this is a Royal Bank, which royals are implicated? Which royals are responsible?

  12. Tom T says:

    May I have your attention please:

    Here is a little side action for all of you gamblers, oh, I’m sorry, investors … I have $10,000 fiat that says not one single senior executive of RBS will see the inside of a prison cell for any length of time over this. Even though the matter has been brought to the attention of the police and other agencies, I am willing to offer even odds. Any takers?

    The matter will drag on for 3 to 5 years so we {the person who takes this bet and myself) will have to follow developments closely. When it comes time for you to hand over the 10K, I promise to use it to buy us a couple of burgers at the fast food joint we meet at.

    • TheDona says:

      These assclowns have already lied to Parliament. And yeah it will drag on for years….like everything else. Put ankle bracelets on everyone now and take away passports.

  13. gorbachov says:

    I am literally sick to my stomach.

    • Auld Kodjer says:

      Fear not. RBS has pre-approved a loan (17% interest, home equity guaranteed) for you to undergo a biliopancreatic diversion. No need to sign.

  14. Petunia says:

    The EU may be having second thoughts about Brexit now, unless they were all doing it.

  15. mean chicken says:

    “Rope: sometimes you just have to let customers hang themselves.”

    This is the creed of the swamp.

  16. pjbaggot says:

    with all the stealing they still lost money !!!!!!!!
    probably the employees stole more from the crooked firm
    than the crooked firm stole from the puiblic

  17. John says:

    Ol’ Boom & Bust Gordon Brown made the boss of RBS ‘Fred the Shred’ a peer, for services to a Labour Goverbment
    Gordon could tax all those derivatives that went belly up to fund his madcap PFI schemes

  18. george mcduffee says:

    Does the Anglo-Saxon financial system [or more exactly its senior management, who seem to be composed of highly intelligent personable sociopaths and fabulists] have a “death wish” in addition to its other mental/ethical problems?

    Should the officers and directors of systemic organizations such as the US Fortune 500 corporations, and the major financial institutions such as RBS, require licensure as we do for commercial airline pilots, truck drivers, doctors, teachers and even barbers/hair dressers before they can be employed in their professions/trades. This should include annual physical and mental evaluation of fitness for employment by government panel of board certified doctors and at least semi-annual drug testing, [Jimmy Cayne (Bear Stearns) is the poster child for drug testing.]

  19. David Rohn says:

    In always get a laugh out of the excuse for instituting cashless economies, dependent on banks for all transactions: ‘in order to cut down on crime’ ha ha . the biggest criminals on the planet are the big banks…and of course the sleazy governments that keep allowing them to get away with all these frauds and crimes over and over again. Golly Madge…I wonder why people are flocking to crypto s (even tho the poor souls don t realize that it s all most likely another big bank / central bank fraud…

  20. Petunia says:

    Didn’t Wells Fargo have to forge millions of signatures to open all those fake accounts? I’m starting to lose track of the crimes.

  21. QQQBall says:

    they will be allowed to retire with pensions and bennies – Just like good ol’ Andy McCabe. no one goes to jail unless they are poor and/or a minority.

  22. Bet says:

    The Golden rule
    Those who have the gold makes the rules
    Banks are govt sponsored criminal enterprises

  23. safe as milk says:

    there was a former business owner on max keiser about 4 years ago explaining in detail how rbs forged his signature and then stole his company from him claiming he was in breach of contract. they then sold it to one of their buddies for a fraction of what it was worth. at the time, it was an uphill battle even to get the courts to look at the guy’s case.

  24. d says:

    “The latest allegations of fraud could turn out to be the tip of a very large and dangerous iceberg, Fraser warns. If the practice of forging signatures was as widespread as the whistle-blowers contend, there’s a risk, albeit small, that a court will decree all contracts between RBS and its customers null and void, which could tip the lender over the edge. Such an outcome may seem preposterous, but so too was the notion that a high street bank would systematically forge its customers’ signatures.”

    The court has to as they all become illegal contracts unless the customers admits they signed it.

    With Forgery of this volume it becomes a matter for RBS to prove beyond Doubt the customer signed.

    With that volume of forgery. Doubt will always be on the customers side.

  25. JR says:

    The wikipedia writeup of RBS (the bank) is rather interesting. (1) the bank invented the “overdraft” (probably subject to nice fees). (2) as “no paper money is legal tender in Scotland” (wikipedia) the RBS can issue its own notes, with various imaginative designs. Maybe these are collectors items. Rather interesting. Have to “collect” a few on a future visit to Scotland. Have to wonder if the actions of RBS are “par for the course” in Scotland, or are “playing in the rough”.

  26. John Henderson says:

    Whistle blower!
    Add his name to the list.currently top I think is

  27. JM Keynes says:

    – What is all the fuss about ? The shareholders were putting the management of the bank under A LOT OF pressure to increase profits. And this is one way to that (by hook or by crook).
    – Remember what Wells Fargo did here in the US ?

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