Legal Business

RBS to appoint new Western European panel as bank aims to cut costs

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In-house The Royal Bank of Scotland
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The Royal Bank of Scotland (RBS) is appointing a new Western European panel with the bank intending to pick a small number of firms to do the bulk of the work in the region.

The window for firm pitches is believed to have closed late last month. The process is being led by head of management services Gillian Collinge and is understood to be a part of an ongoing review of the bank’s structure across Europe.

RBS outlined its focus on large corporate clients operating in the UK and Western Europe in its 2015 annual report, with a goal to reduce operating expenses by £800m.

RBS has worked closely with Magic Circle firms, appointing Allen & Overy, Clifford Chance and Linklaters to the top tier of its legal panel in January. These will have places for another three years. During its review last summer, firms were asked to freeze their rates in exchange for five years on the panel, while those who pitched at higher rates would secure three year places.

Other firms to secure places on the refreshed panel were Norton Rose Fulbright, Macfarlanes, DLA Piper, Pinsent Masons, Simmons & Simmons, King & Wood Mallesons, Herbert Smith Freehills, Dentons, Ashurst, Scottish firm Brodies and Bristol-headquartered TLT. Reed Smith was one of a handful of US firms to secure a panel position.

Collinge said the bank was still in a tender process and would not comment while it was still dealing with individual firms.

The bank appointed former Barclays’ deputy group general counsel (GC) Michael Shaw as its GC earlier this year after John Collins resigned after just 11 months to join Santander UK as director of legal, compliance, regulatory affairs and anti-money laundering.

Meanwhile, RBS has also kicked off a review of its 400-strong legal team, in a move that could lead to staff redundancies. While it is not clear how many roles will be affected by the review, the process will be carried out this summer by new RBS general counsel Michael Shaw.

madeleine.farman@legalease.co.uk

Legal Business

Mishcon acts for former Torex boss taking on RBS and KPMG in £128m fraud claim

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Litigation KPMGMishcon de ReyaThe Royal Bank of Scotland
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Mishcon de Reya is acting in a £128m claim against the Royal Bank of Scotland and KPMG brought by former Torex Retail chief executive Neil Mitchell, with Dentons and Stephenson Harwood advising the defendants.

Mishcon de Reya disputes partner Richard Leedham is leading for the claimant with Stephen Auld QC, Michael Clark and Sophie Webber of One Essex Court as barristers.

Dentons partner Steven Mills leading on the case, and has instructed Fountain Court’s Patrick Goodall QC and Richard Power.

Also named in the case are Torex financial advisers KPMG who are being advised by Stephenson Harwood partner Ros Prince.

Mitchell’s case is being heard in the Royal Courts of Justice in London and alleges fraud against RBS, KPMG and two KPMG named partners. He is also bringing a separate action in the US against New York-based firm Cerberus Capital Management.

Mitchell claims that collusion between RBS, Cerberus and members of Torex’s advisers led to the purchase of the company at around £400m below the firm’s value, which caused its collapse.

He first brought his concerns to the Serious Fraud Office after Torex was sold to Cerberus in 2007 for £204m, but was later dismissed from the firm.

Mitchell said: ‘This is a landmark case against a state-funded bank which I allege has been acting against the interests of taxpayers for a number of years. I am seeking justice not only for myself, but also in the public interest of the hundreds of viable British businesses, thousands of employees and their families.’

A spokesperson for RBS said: ‘We have thoroughly investigated Mr Mitchell’s allegations and believe them to be entirely without merit. Mr Mitchell has chosen to issue legal proceedings which will be met by a full defence.’

RBS is also expected to face further claims running into the billions of pounds from hundreds of small and medium-sized businesses that they were forced out of business for the bank’s profit. That litigation is being brought by Enyo Law.

A spokesperson for KPMG said: ‘We strongly refute the allegation that KPMG or its members have acted improperly; there is no substance to the claims that have been made. The Courts have previously dismissed similar allegations and we have applied to have the current proceedings struck out.’

Cerberus Capital Management declined to comment.

matthew.field@legalease.co.uk

Legal Business

Q&A: RBS general counsel Collins on external advisers, technology and the stress of investigations

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In-house The Royal Bank of Scotland
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Set to take on the top legal role at Santander UK later this year, The Royal Bank of Scotland’s outgoing general counsel (GC) John Collins (pictured) talks to Sarah Downey about his career and the growing recognition of in-house lawyers.

Tell me about the evolution of the GC…

It depends how far forward you roll… but UK GCs ought to become more strategically important across the board – some companies but not all will embrace the role in a manner similar to the US where GCs are naturally at the top table and seen as one of the senior officers in the bank and whose counsel is taken properly as the broad consigliere. Without sounding too much like a robot… paralegals and documentation teams increasingly will be mobilised with oversight from specialist lawyers because there should be software and technology available to perform the tasks larger groups of specialist human beings perform today.

What kind of leader are you?

Supportive and coaching… with a smattering of pace setting when needed. I try to engage people and bring them with me. I’m not dictatorial…

What are your dealings with external advisers like?

They should provide good, strong services, value for money and invest in the relationship and equally the institution should value that service, the quality and expertise, not just price. You draw a balance. What has changed the most is that we look more carefully at how we extract value and what we pay for externally versus internally. We did when we relaunched the panel three years ago and more recently. The big operational change is deconstruction of service so we pay law firms for high-end advice and consider the use of LPOs and other providers for the volume work – paying the right rate for the job. We also use the Mexican wave approach – we get a couple of law firms to work together, one which has expertise, the other which is better for the volume work.

What has been your worst day in the office?

I have had to deal with a lot of complex and difficult issues. Briefing management on why you have to behave in a particular way – self investigate and make sure you’re on the front foot and being co-operative is a hard path to walk. But it’s in the best interests of the institution in the end. The hardest part is often the human impact – the consequences for individuals and the stress of being the subject of often protracted investigations.

Who do you admire?

Bob Hoyt at Barclays is doing a good job and is a pleasure to deal with. Kate Cheetham is a strong colleague at Lloyds – I value her opinions on things – she’s a good thinker. From time to time where appropriate we share best practice – it’s about focusing on moving the role of the GC in the right direction.

Would you ever return to private practice?

No, I’m too old. I’m used to working hard but the idea of working hard and having to go out and chase business, essentially be someone who attempts to rain make… it doesn’t appeal to me. I wouldn’t be very comfortable having to go out and schmooze and market myself to people.

sarah.downey@legalease.co.uk

Legal Business

Q&A: Royal Bank of Scotland general counsel John Collins

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In-house The Royal Bank of Scotland
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Set to take on the top legal role at Santander UK later this year, The Royal Bank of Scotland’s outgoing general counsel (GC) John Collins talks to Sarah Downey about his career and the growing recognition of in-house lawyers.

Tell me about the evolution of the GC…

Legal Business

RBS hires Shaw as GC as the ex-Barclays veteran takes one of the top roles in finance law

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Strategic recruitment The Royal Bank of Scotland
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The Royal Bank of Scotland (RBS) has hired Michael Shaw (pictured) as its next general counsel with the former Barclays and Herbert Smith veteran taking on one of the most prominent GC roles in the UK.

Shaw arrives after six years as deputy group general counsel at Barclays, leaving the bank at the end of last year. He inherits a 400-lawyer team that will be kept busy over the coming months with incoming ring-fencing reforms for banks to separate their retail and investment banking arms, and the expected return of RBS to private ownership following its £45bn government bailout in 2008. The bank is also in the process of selling challenger bank Williams & Glyn, which has 1.8 million customers, as a condition of its state bailout during the financial crisis.

Shaw joined Barclays at the end of 2009 from City law firm Herbert Smith, where he had been a corporate partner for over 12 years. At Herbert Smith he advised investment banks on Rio Tinto’s hostile bid for BHP Billiton and EDF on its takeover bid for British Energy.

During his time at Barclays, which saw the bank investigated over manipulation in the Forex and Libor markets, Shaw has held a string of management titles. He was a member of the firm’s citizenship council and the disclosure advisory group, which advises the company on what has to be included in stock exchange announcements.

He was also a past chair of the legal division’s diversity and inclusion committee. He brings much-needed experience to the legal team at RBS, which has been hit by a string of senior departures over the last two years. It follows a three-month search following John Collins’ surprise resignation in December to join Santander. The bank was also hit by the exit of deputy GC Rushad Abadan to insurer Standard Life in January and the loss of its EMEA head of financial crime Carolina Garces Monterrubio to HSBC at the start of 2015.

RBS’s stock with external law firms has also fallen after a series of bruising panel reviews and years of cost-cutting and retrenchment at the banking group.

Collins had replaced the retiring Chris Campbell as general counsel at RBS on 1 January 2015 but resigned less than a year into the role to join Santander UK as director of legal, compliance, regulatory affairs and anti-money laundering. Campbell had served as RBS’s top lawyer for five years, during which time Collins was seen as his heir apparent. During his time as GC, Collins oversaw the $2bn settlement of US litigation against nine banks including RBS, HSBC and Barclays over alleged losses caused by the rigging of foreign exchange markets.

Shaw takes on his new role on 19 April this year.

tom.moore@legalease.co.uk

Read Michael Shaw’s profile here. 

Legal Business

Dentons wins bid to get £30m RBS Libor dispute moved onto financial list

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Litigation DentonsThe Royal Bank of Scotland
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Lawyers at Dentons, acting for the Royal Bank of Scotland (RBS), have successfully moved the £29m Property Alliance Group (PAG) Libor dispute into London’s newly-created financial court.

In proceedings brought in September 2013, PAG alleges RBS induced it to enter four interest swap rate agreements between 2004 and 2008 that employed sterling Libor as a reference rate and ‘implicitly misrepresented that it was not rigging the relevant Libor rate’. A trial date has been set for May this year, and there have been a number of preliminary decisions by Justice Birss on matters such as disclosure.

However RBS requested the case be transferred into the financial court, and a hearing was held on the issue on 27 January, while PAG, represented by Cooke, Young & Keidan, opposed the application, and complained that the request was made out of time.

However Sir Terence Etherton, chancellor of the High Court, decided despite the fact a new judge would be needed, the case should be transferred.

The judge said that even though the value of the claim was less than £50m, which is the size of claim the court had been established to hear, the proceedings fell within the definition of ‘financial list claim’ as required by the Civil Procedure Rules.

The judgment said: ‘Allied to those considerations is the point that if, particularly in relation to the libor allegations, this case is to be viewed in a general sense as a test or lead case, which will be followed by others suitable for and likely to be commenced in or transferred into the financial list, it is desirable that it be dealt with by a judge of the financial list in order that the judgment following trial carries appropriate weight and respect in the financial markets.’

The judge added that it was well known there are others who have claims and are likely to litigate similar issues arising out of the alleged rigging of Libor rates.

He added: ‘It seems reasonably clear that the judgment following trial in the present proceedings will have an impact on other cases already launched and those which will be launched in the future. It is also likely that decisions about provisions in the agreements between RBS and PAG limiting RBS’s exposure to claims for negligence will have relevance elsewhere in the markets.’

Cooke, Young & Keidan instructed Brick Court Chambers barrister Tim Lord QC while Dentons instructed David Foxton QC of Essex Court Chambers for RBS.

The financial list debuted late last year, and its first decision, a dispute between Blackstone fund GSO Credit, Barclays Bank and HCC International Insurance Company was released in January. Last month the high-profile £3bn bond dispute between Russia and Ukraine was also filed at the specialist court.

victoria.young@legalease.co.uk

Read the full decision here. 

Legal Business

RBS plans ‘clean up’ and sets aside £2bn for PPI claims and US litigation

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Litigation The Royal Bank of Scotland
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The Royal Bank of Scotland (RBS) has warned it will report its eighth successive full-year loss this year as it sets aside £2bn for past scandals including claims relating to mortgage-backed securities and payment protection insurance.

Ahead of announcing its annual results for 2015, the bank said it is making an additional £1.5bn provision relating to US mortgage-backed securities, a sum that does not include provisions for investigations by the Department of Justice or US Attorneys investigations.

Following guidance from the Financial Conduct Authority it is also making an additional provision of £500m for payment protection insurance mis-selling in the UK, taking total incurred costs and future provisions to £4.3bn.

With Chancellor George Osborne keen to sell off the government’s 73% stake in the bank over the course of this Parliament, RBS chief executive Ross McEwan said the bank will conduct a ‘clean-up and improve our core business’.

McEwan said: ‘We’ve always been open about the scale of past issues facing RBS and although there is clearly much more to do, this announcement is a further step towards addressing legacy issues and building a great bank for our customers and delivering long term value for our shareholders.’

RBS is also in the process of appointing a new group general counsel after high-profile legal chief John Collins resigned after just 11 months for a role at Santander UK as director of legal, compliance, regulatory affairs, and anti-money laundering.

The bank also recently refreshed its external adviser panel with Magic Circle firms Clifford Chance, Linklaters and Allen & Overy winning appointments to the roster for the next three years.

sarah.downey@legalease.co.uk

 

Legal Business

Law firms win pay battle with RBS as Clifford Chance, Linklaters and Allen & Overy reappointed

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In-house The Royal Bank of Scotland
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The tug of war between The Royal Bank of Scotland and its go-to law firms over a proposed pay freeze ended in victory for the lawyers, as Magic Circle firms Clifford Chance (CC), Linklaters and Allen & Overy (A&O) won appointments to the bank’s legal panel for the next three years.

When launching its review in the summer of 2015, RBS asked law firms to freeze their rates in exchange for five years on the panel. Those who pitched at higher rates would receive spots for the three years the new panel runs from 1 January 2016.

However, most law firms pitched higher rates than their previous panel commitments – given their own increased costs from rising salaries in the City and higher real estate expenditure. One lawyer close to the panel review told Legal Business: ‘They are nearly all on a three-year term…read into that what you will. There were no major casualties.’

RBS sent letters out to all successful panel firms before Christmas, with CC, Linklaters and A&O retaining their spots on the firm’s top tier panel. Other firms to secure places on the refreshed panel were Norton Rose Fulbright, Macfarlanes, DLA Piper, Pinsent Masons, Simmons & Simmons, King & Wood Mallesons, Herbert Smith Freehills, Dentons, Ashurst, Scottish firm Brodies and Bristol-headquartered TLT. Reed Smith was one of a handful of US firms to secure a panel position.

Freshfields Bruckhaus Deringer and Berwin Leighton Paisner both won a spot on the bank’s customer transactional panel which means they can work for RBS clients.

The review is the first and last panel run by RBS general counsel John Collins, who resigned just 11 months after becoming the top lawyer at the leading high street bank in December. Collins had replaced retiring Chris Campbell as general counsel on 1 January 2015 but has resigned less than a year into the role to join Santander UK as director of legal, compliance, regulatory affairs and anti-money laundering in the second quarter of this year.

A City partner close to the process said: ‘They’ve been reducing the number of firms year-on-year so it would be counter-culture to see new names appear. In the time I’ve been working with them a lot of our rivals for certain types of work have disappeared from the panel. It’s been getting narrower. One of the mantras they’ve been rolling out over many years is the desire to reduce the usage of Magic Circle firms so it’s maybe a bit surprising that there’s still a lot of them on the list. The workload may be reducing but its noticeable there’s still a lot of them on that list.’

tom.moore@legalease.co.uk

Legal Business

Simmons & Simmons picked to defend RBS against £800m rate-rigging claim

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Litigation Kobre & KimSimmons & SimmonsThe Royal Bank of Scotland
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The Royal Bank of Scotland (RBS) has instructed Simmons & Simmons to defend a £800m claim from former Sheffield lawyer turned property mogul Glenn Maud over alleged losses from Euribor rigging.

Maud launched legal action in London’s High Court over a finance package signed in 2008 to buy Spanish bank Santander’s global headquarters for £1.5bn. He purchased the property through his Spanish property vehicle Marme Inversiones and RBS led on the finance package alongside ING Bank, HSH Nordbank, Bayerische Landesbank, and Caixa D’Estalvis.

One of the biggest claims in London over Euribor rigging, Maud alleges RBS knew it was manipulating the European interest rate benchmarks and as such should be paid ‘damages for fraudulent or negligent misrepresentation or deceit’ for the interest rate swaps he entered into.

The British bank was part of a group, including Citigroup and JP Morgan, fined what was a record €1.7bn by the European Commission over the benchmark interest rate rigging cartel in late 2013.

RBS denies the allegations and has hired Simmons & Simmons partner Richard Bunce to spearhead its defence. The four other banks involved in the deal are also named as defendants in the claim and have instructed Allen & Overy partner Andrew Denny to defend them.

Bunce has instructed 3 Verulam Buildings’ Adrian Beltrami QC and Laura John as counsel, with Denny picking Fountain Court’s Tim Howe QC and Adam Sher for the other defendants.

Kobre & Kim’s founding partner Michael Kim, alongside partners Stephen Hayes, Andrew Stafford QC and Simon Cullingworth are bringing the claim for Maud. The firm has instructed 4 Stone Buildings’ Richard Hill QC and Alastair Tomson as counsel.

Simmons was recently picked by Barclays to advise on its recent Financial Conduct Authority (FCA) inquiry into deals for wealthy clients, which resulted in a £72m fine for the bank in November.

tom.moore@legalease.co.uk

Legal Business

Top RBS lawyer resigns as John Collins makes surprise defection to Santander

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In-house The Royal Bank of Scotland
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Royal Bank of Scotland (RBS) general counsel John Collins has resigned just 11 months after becoming the top lawyer at the leading High Street bank.

Collins had replaced retiring Chris Campbell as general counsel at RBS on 1 January 2015 but has resigned less than a year into the role to join Santander UK as director of legal, compliance, regulatory affairs and anti-money laundering. Campbell had served as RBS’s top lawyer for five years, during which time Collins was seen as his heir apparent. Collins is expected to serve a six-month notice period.

An RBS spokesperson confirmed Collins’ resignation. One RBS lawyer told Legal Business: ‘There is no obvious replacement at RBS and John’s a loss as he’s trusted, very capable and a good guy.’

The lawyer added that Collins ‘is close to Nathan Bostock as he’s ex-RBS’. Bostock, who quit his finance director post at RBS at the end of 2013, has since risen to become head of Santander UK.

Collins runs a team of over 400 lawyers at RBS and is well regarded by the bank’s management. Since becoming GC, he has overseen the $2bn settlement of US litigation against nine banks including RBS, HSBC and Barclays over alleged losses caused by the rigging of foreign exchange markets.

Collins had served as deputy GC following a string of senior roles at the bank. He arrived at RBS from Dutch-based banking group ABN Amro, which was acquired in 2007 by a consortium made up of RBS, Santander and Fortis.

Deputy counsel at ABN Amro at the time of the takeover, Collins became one of RBS’ key figures in the aftermath of the financial crisis. Collins spearheaded the sell-off of assets to reduce RBS’ debt pile after its highly leveraged takeover of ABN. He started his career at Wilde Sapte in 1990 before moving in-house at Citibank in 1995.

RBS has seen a series of senior legal departures recently, with deputy GC Rushad Abadan set to join insurer Standard Life as its GC in the New Year. The British banking giant also lost its EMEA head of financial crime Carolina Garces-Monterrubio to HSBC at the start of the year. The resignation comes as RBS is set to complete a scheduled panel review before the end of 2015.

tom.moore@legalease.co.uk

For our analysis of the contentious issues facing in-house teams at major financial institutions, read The end of the tunnel – litigation and regulatory challenges in financial services (£)