In line with company policy the Royal Bank of Scotland (RBS) has sent itself a stern letter warning that as it had suddenly found itself £692 million in the red without clearing it with itself first, it would have to pay itself charges of £38 million for unauthorised borrowing.
‘You know how it is,’ said chairman Sir Tom McKillop, ‘we knew we were going to go ‘a bit over’ this year but completely forgot to phone ourselves and agree some new terms, although actually there probably wouldn’t have been much point in that really as we would have had to refuse to give ourselves any extension of facilities, given the current climate.’
‘The first thing I knew about it was when I had to write a letter to myself explaining the charges and that there would also be a further ‘maintenance charge’ of £28 million applied in September because of our actions during the last financial year,’ continued Sir Tom. ‘It arrived on my desk this morning and, though I consider myself a reasonable man, when I opened it, well, if I’m honest, I was livid.’
Over the last few years the bank has been a model customer to itself with healthy credit balances of £8.2, £9.4 and £10billion at the end of each of the last three years, ‘But some years, well, you know how it is,’ said Sir Tom, ‘you just spend that little bit too much – it happens, and the utility bills for all our branches and offices have just gone through the roof. OK, so we bought some expensive ABN stuff as well which turned out to be rubbish that we couldn’t even flog at a car boot sale, but even so, this really doesn’t help.’
But FSA Chairman Hector Sants urged RBS to get a grip and get back on track through any viable means which may include not spending so much on lunch or multi-million pound bonuses and generally sticking to a tighter budget, warning that if the situation was allowed to continue the charges could just end up rolling over into each other from one year to the next and spiralling out of control.
RBS is considering suing itself for the return of its charges pending the outcome of a court case brought against banks by the Office of Fair Trading. ‘I expect the judgement will show that we didn’t have to pay the charges to ourselves in the first place and I expect a full refund,’ said Sir Tom, ‘although if you’ll excuse me, I have to appear in court this morning to defend a case being brought against us by the OFT.’