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UK RBS Tomlinson Report - Very excited
Topic Started: 25 Nov 2013, 10:13 PM (1,650 Views)
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Very excited. The Tomlinson report is out today on RBS fraud. It is exactly the same as what we have been saying about CBA faking defaults on Bankwest customers. Our Senate should just change the title of the document from "RBS" to "CBA". Anyone who thinks it is not in a banks commercial interests to foreclose on a productive business should read it, especially the section titled "4. Engineering Defaults". CBA will be next, followed by massive class action (over $3B).

http://www.tomlinsonreport.com/docs/tomlinsonReport.pdf
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skamy
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25 Nov 2013, 10:13 PM
Very excited. The Tomlinson report is out today on RBS fraud.
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The points made by the exbanker suggest that there is a process by which businesses are assessed for their potential value to GRG not their level of distress. In fact, two businesses could be operating at similar levels of performance, but one may have assets whereas the other does not. The one without assets could be allowed to continue trading as normal as there is no additional value for the bank in putting it into GRG, whereas the business with assets will enter GRG as there is more value to be made from that than continuing to lend to the business as normal.


Absolutely disgraceful, this shockingly immoral behaviour led to suicides, someone should face criminal charges.
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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"Mr Tomlinson suggested individuals should be jailed if the allegations against RBS were proven to be true"

http://www.hartlepoolmail.co.uk/news/cable-passes-rbs-data-to-watchdogs-1-6264614

There will be prosecutions of the CBA Board here in Australia. I guarantee it. This is why they have been spying on us and spending millions of dollars trying to tell Australia that "this is all a conspiracy theory, a bank would never do this".
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peter fraser
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25 Nov 2013, 10:13 PM
Very excited. The Tomlinson report is out today on RBS fraud. It is exactly the same as what we have been saying about CBA faking defaults on Bankwest customers. Our Senate should just change the title of the document from "RBS" to "CBA". Anyone who thinks it is not in a banks commercial interests to foreclose on a productive business should read it, especially the section titled "4. Engineering Defaults". CBA will be next, followed by massive class action (over $3B).

http://www.tomlinsonreport.com/docs/tomlinsonReport.pdf
Thank you. That was more or less what I was expecting. Business borrowers need to understand the power of the lending covenants that they are signing. That's why the USA, the UK and other countries are finding it difficult to fully recover from the GFC.

Luckily we didn't see much of it here, but it doesn't surprise me that it did occur.

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There will be prosecutions of the CBA Board here in Australia. I guarantee it. This is why they have been spying on us and spending millions of dollars trying to tell Australia that "this is all a conspiracy theory, a bank would never do this".


Your problem is that banks acting on their lending covenants is what is expected of them - it's part of the prudent management of their loan book. Most of the problems that the CBA will have encountered will be with Bankwest loans, not CBA loans. That's because Bankwest wrote rubbish. It was always going to end in tears once the GFC hit.



Edited by peter fraser, 25 Nov 2013, 11:32 PM.
Any expressed market opinion is my own and is not to be taken as financial advice
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Sorry Peter. You still keep missing the point. Ralph Norris's own report into Bankwest shows Bankwest impairments were low as at Jul 08. They increased from $83m in Jan-Jun 08 to final end 08 total of $630. BY sheer coincidence when CBA started the purchase. (They started in July 08 - from witness statements in court last month)

These impairments did not occur because the customers where broke but because CBA knew they could run the "RBS scam" knowing that Australians would never believe a bank would forcibly default people.

Its possible that your contacts at Bankwest wrote rubbish and I'm sure there are a percentage of customers who did genuinely default during the GFC which is always an unfortunate but inevitable part of banking. It is important that you don't let the "CBA PR spin" confuse you into thinking that all $630m were like this. The reason why we are now about to move into our second Senate Inquiry into the matter is that all these allegations of Bankwest customers being induced into default are true.

FYI. As a result of this $630m Impairment Expense, CBA got $1.6B off the price based on Gross Impairment. Hence CBA benefitted from manufactured defaults just as RBS did.

HBOS CEO. Summary: Bankwest was "the good bank" with "the lowest losses". We were forced to "divest" it but didnt want to.
http://www.youtube.com/watch?v=S-F4SewI_4E

CBA abused an impairment indemnity to get $1.6B off the price based on RBS-style induced impairment.

There's too much to write but you'll just have to read it on the front page of the newspapers in a few months time.
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peter fraser
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26 Nov 2013, 12:05 AM
Sorry Peter. You still keep missing the point. Ralph Norris's own report into Bankwest shows Bankwest impairments were low as at Jul 08. They increased from $83m in Jan-Jun 08 to final end 08 total of $630. BY sheer coincidence when CBA started the purchase. (They started in July 08 - from witness statements in court last month)

These impairments did not occur because the customers where broke but because CBA knew they could run the "RBS scam" knowing that Australians would never believe a bank would forcibly default people.

Its possible that your contacts at Bankwest wrote rubbish and I'm sure there are a percentage of customers who did genuinely default during the GFC which is always an unfortunate but inevitable part of banking. It is important that you don't let the "CBA PR spin" confuse you into thinking that all $630m were like this. The reason why we are now about to move into our second Senate Inquiry into the matter is that all these allegations of Bankwest customers being induced into default are true.

FYI. As a result of this $630m Impairment Expense, CBA got $1.6B off the price based on Gross Impairment. Hence CBA benefitted from manufactured defaults just as RBS did.

HBOS CEO. Summary: Bankwest was "the good bank" with "the lowest losses". We were forced to "divest" it but didnt want to.
http://www.youtube.com/watch?v=S-F4SewI_4E

CBA abused an impairment indemnity to get $1.6B off the price based on RBS-style induced impairment.

There's too much to write but you'll just have to read it on the front page of the newspapers in a few months time.
I'm not missing the point. Everyone knew that Bankwest were buying market share through easy business lending. That was exposed during the GFC. Lots of good business's suffered badly through no ones fault, just tough trading conditions.

Lending covenants make business borrowings dangerous for the borrowers. I don't like them but I knew that they were there and I expected them to cause problems especially if bank executives played too safe. It was a case of the safer they played the more risky it got, and a lot of bank execs are pretty risk averse.

I write as much business lending as possible as home loans so the borrowers have UCCC and NCCP protection from aggressive recovery tactics, but that's not always possible when commercial securities are being relied upon and the loan purpose can't be disguised.

Essentially the CBA will have acted on their loan covenants, which is what they are expected to do. That could cause a dangerous situation in the banking system and could lead to heavy losses, and perhaps a banking collapse.I don't know how aggressively the banks pursued those recovery policies. i didn't see any of it, but I rarely deal with BankWest and I didn't send them any crap deals.

The problems are more systemic than just banks trying to make an extra few bucks, and that applies to the UK as well. You might see some money recovered by the borrowers you represent because courts often reward the down trodden, but the issue is deeper than that.

There is a problem with overzealous regulators and subsequent lending costs for banks which can't be easily solved. It's a high risk business. Governments also don't have business friendly policies in place to make profits fatter and more easy to earn.
Edited by peter fraser, 26 Nov 2013, 12:34 AM.
Any expressed market opinion is my own and is not to be taken as financial advice
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peter fraser
25 Nov 2013, 11:27 PM
Thank you. That was more or less what I was expecting. Business borrowers need to understand the power of the lending covenants that they are signing. That's why the USA, the UK and other countries are finding it difficult to fully recover from the GFC.

Luckily we didn't see much of it here, but it doesn't surprise me that it did occur.




Your problem is that banks acting on their lending covenants is what is expected of them - it's part of the prudent management of their loan book. Most of the problems that the CBA will have encountered will be with Bankwest loans, not CBA loans. That's because Bankwest wrote rubbish. It was always going to end in tears once the GFC hit.


One last main point you keep misunderstanding. CBA were not "acting on their lending covenants". They did exactly what RBS did. They "manufactured defaults" so they "act on their lending covenants" based on fabricated information. This is illegal and just as it will lead to prosecutions in the RBS board, it will lead to prosecutions in the CBA Board.

Keep an eye on the papers over the next few months.
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peter fraser
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26 Nov 2013, 12:32 AM
One last main point you keep misunderstanding. CBA were not "acting on their lending covenants". They did exactly what RBS did. They "manufactured defaults" so they "act on their lending covenants" based on fabricated information. This is illegal and just as it will lead to prosecutions in the RBS board, it will lead to prosecutions in the CBA Board.

Keep an eye on the papers over the next few months.
Well i can't comment on that because I saw no evidence of it, but I'll keep an open mind. A lending covenant default could be simply a lower EBITDA without any missed payments, or a shortfall in the LVR based on a revaluation. A business doesn't need to miss a payment to be in default of lending covenants. If banks are not going to act on their covenants - why have them at all?

I tend to think that you have some case as the CBA will have pushed the weaker borrowers inherited from BankWest to claim against the HBOS indemnity. I can't see why they would force a strong borrower into bankruptcy though. I did read the report and understand that charging high fees would add to profits, but the reputational risk would be too high in a small country like Australia.

You will be aware that BankWest had a high exposure in WA but not so much in the eastern state where I am.

$630M is not a lot of money.
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peter fraser
26 Nov 2013, 12:51 AM
Well i can't comment on that because I saw no evidence of it, but I'll keep an open mind. A lending covenant default could be simply a lower EBITDA without any missed payments, or a shortfall in the LVR based on a revaluation. A business doesn't need to miss a payment to be in default of lending covenants. If banks are not going to act on their covenants - why have them at all?

I tend to think that you have some case as the CBA will have pushed the weaker borrowers inherited from BankWest to claim against the HBOS indemnity. I can't see why they would force a strong borrower into bankruptcy though. I did read the report and understand that charging high fees would add to profits, but the reputational risk would be too high in a small country like Australia.

You will be aware that BankWest had a high exposure in WA but not so much in the eastern state where I am.

$630M is not a lot of money.
Todays Oz, RBS style manufactured defaults would never happen in Australia right :) The UK are currently making the link to CBA
The senators quoted were involved in last years CBA/Bankwest inquiry hence the "very troubling" quotes

http://www.theaustralian.com.au/business/financial-services/latest-uk-bank-scandal-is-warning-to-murray-inquiry/story-fn91wd6x-1226770850021#

"$630M is not a lot of money" This is the Impairment Expense, not to be confused with the Gross Impairment. ie if you had a $1M loan and CBA impaired you by $1 dollar they claimed the whole $1m from HBOS indemnity. The gross claim on indemnity is over $2B. They did it again in 2010 (this time without the indemnity- it was just a 'smash and grab') Total impairment claim = $3B + damages to customers etc.

Hence CBA surviellance on class action advocates.
more stories next week
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CBA are denying that the Tomlinson Report style of Royal Bank of Scotland manufactured-defaults relate to Bankwest. Here is a split screen video showing the similarities and differences for all to make their own decisions. This matter will be discussed at the ASIC senate inquiry in Feb 2014

http://commbankdiaries.com.au/2013/12/uk-parliament-debate-cbabankwest-style-allegations-manufactured-defaults/
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