The Government adviser who this week issued a scathing report on RBS’s treatment of small businesses could have been speaking from his own experiences. Accounts for Lawrence Tomlinson’s company show he has refinanced his own credit facilities, at great cost, with a consortium led by RBS.
Mr Tomlinson’s LNT holding company, which has a diverse range of businesses including the Ginetta GT racing series, chemical de-icers and old people’s homes, show the refinancing process cost him £2.6m in advisory costs.
The high price of renegotiating its £73.7m credit facilities with RBS’s NatWest arm, Santander, Clydesdale and Bank Leumi, helped to push LNT into a £7.7m loss.
While his business appears healthier than the firms RBS put into its Global Recovery Group, whose plight he highlighted in his report, his own loan costs chime with his description of the outlandish external audit fees banks levy on their customers. Mr Tomlinson’s accounts also highlight how the reluctance of banks to lend to entrepreneurs was hitting his construction arm, stating: “Purchasers of our finished product are finding it difficult to raise finance to purchase the asset.”
As well as bank facilities, LNT is also reliant on loans from Mr Tomlinson himself. It owes £27.6m to businesses controlled by or related to him. He has previously stated that he had to front £15m of his own money in 2009 after RBS refused to increase his credit facilities.
A number of LNT’s loans are up for renewal again next March, the accounts state
Revenues at LNT in the year to 31 March 2013 jumped to £76.2m from £36.8m thanks to the lucrative sale of a number of care homes during the year, while losses improved from £10.5m to £8.5m.
Meanwhile, experts predicted yesterday that the RBS-commissioned investigation into Mr Tomlinson’s allegations, being led by City legal giant Clifford Chance, could easily end up costing taxpayers a further £1m or more. Tony Willams of advisory group Jomati, who spent 20 years at Clifford Chance, said the investigation would probably be in two phases: stage one would to investigate the specific cases and allegations, with phase two being an inquiry into any proof of systemic wrongdoing.
“If they stick to just the first stage it could be less than £1m but a second stage process could be considerably more,” he said.
Clifford Chance refused to comment on how much they would be billing the taxpayer-owned bank for its services while RBS said it was too soon to comment but that the inquiry would report in the new year.
Meanwhile, it emerged that RBS had offloaded its Special Opportunities Fund to its management team. The bank retains a 13.5 per cent stake in the division that takes equity stakes in businesses, but the fund has moved out of RBS HQ and is awaiting a licence to trade independently.
News of the deal came a day after one investee business, Arrow Global, backed a takeover of 1990s student loans.