LOBO Loans a “Fraud on the People” – RBS AGM Q: via Newham Cllr John Whitworth

— Transcript of AGM Question delivered by John Whitworth 30 May 2018 at RBS AGM – Gogarburn, Edinburgh, which may differ slightly from the version actually delivered —

“I’m Councillor John Whitworth – the Chair of the Scrutiny Committee at the London Borough of Newham

Mr Chairman – Sir Howard Davies I would like to congratulate you for your honesty on BBC Question Time in January 2018 when you said: “I think PFI has been a fraud on the people, because essentially the government is always the cheapest borrower & can borrow money more cheaply than anybody else and therefore if you’re going to hand over the total provision of something like a big hospital to somebody who’s borrowing costs are going to be higher than yours, what is the advantage of doing that?”

At Newham council 80% of all council tax collected is paid as interest to banks, including RBS.

So why is it that RBS is accessing cheap credit from the Bank of England – and then looking to extract the maximum interest rate possible, from councils like Newham, still reeling from austerity, as the price we pay for the 2008 financial crisis, caused in no small part by the actions of your bank? which was the largest in the world at the time.

CEO Ross McEwan has previously said he wanted to ban teaser rate loans because they mislead customers. LOBOs feature a low teaser rate, which then jumps up to the sky high interest rate of 7.6%, for loans from RBS totalling £150m taken out after the 2008 crash, when BoE base rates were just 0.5%.

Lets not forget Newham Council is local government. Our credit rating is the same as the UK Government (AAa) and significantly higher than the credit rating of your bank.

At Newham Council – as per your comments on PFI Howard Davies, we’re still trying to work out why Council officers entered LOBO Loans, with higher risk and interest rates than alternative Government loans? These loans were taken out direct from RBS salesmen, not through an advisor or broker.

We would therefore be grateful if RBS could provide the marketing and promotional materials for your portfolio of inverse floater RBS LOBO loans, sold to councils between 2009 and 2012.

If, as you claim, RBS has done nothing wrong, I see no reason why RBS would not share this information with customers such as Newham Council – in order to understand how the council came to be paying such a large and unsustainable chunk of its revenues on servicing bank debt.”

– Watch the video of John Whitworth’s AGM Question below, including the RBS Chairman’s response –

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