RBS's 'outrageous' pull-out from Peacocks talks puts rescue at risk
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Monday 16 January 2012
Taxpayer-owned Royal Bank of Scotland stands accused of a decision to scale back its lending exposure to troubled high street operators, potentially killing retailers and risking major job losses.
Sources close to rescue talks over the discount clothes chain Peacocks said the bank suddenly went cold on plans to refinance the company after months of positive negotiations. The bank's decision could push the chain into collapse, and administrators at KPMG are waiting in the wings.
According to those close to the negotiations, RBS bankers announced the change of course at a meeting just over a week ago. Peacocks' other bank, Barclays, has remained, and continues to be supportive and prepared to keep lending.
"It was unbelievable. They just suddenly said they were taking a different view of retail businesses and could no longer support the process," said one source at the meeting. "Management were furious. This is a decent company, with growing sales but way too much debt." Another said: "Their behaviour has been outrageous. Now we're looking at a potential threat to some 13,000 jobs. Is this the way a taxpayer-owned bank should operate?"
RBS and Barclays had been negotiating with shareholders on forms of debt-for-equity swap, a technique whereby the lenders accept shares in return for taking a loss on their loans.
Peacocks, chaired by the former Asda and Royal Mail boss Allan Leighton, has been struggling to service its £240m of debt. Last year its underlying profits before those interest payments was £70m. Its like-for-like sales rose 2 per cent over the Christmas period, albeit with a fall in profit margins.
However, attempts to find new investors have repeatedly failed.
RBS denied there had been a change in its lending policies towards the retail sector as a whole, highlighting that it has remained supportive to another troubled chain, HMV. "Each company restructure is judged on its own merits," it said. But it added: "Clearly the difficult conditions retailers face is an important factor."
Barratts saved but 2,300 jobs go
Administrators to the collapsed Barratts shoe shop chain have sealed a deal that will mean a total of 2,290 staff have lost their jobs. Michael Ziff, a former chief executive, is buying 89 shops, safeguarding 1,184 staff. But 39 stores will close. In December, the administrator, Deloitte, axed 1,610 employees after no bidders came forward for its concessions business. Yesterday's deal will see a further 680 redundancies. Deloitte's Daniel Butters said that given the state of the high street he was "delighted" to have found a buyer.
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