Four hotels, an £8m firm, all gone – one Norfolk hotelier’s battle with RBS

PUBLISHED: 06:35 21 March 2018 | UPDATED: 13:51 21 March 2018

David Easter's firm was placed into an RBS unit called GRG and collapsed. Photo: Sonya Duncan

David Easter's firm was placed into an RBS unit called GRG and collapsed. Photo: Sonya Duncan


From a growing hotel chain to losing almost everything in a battle with his bank; David Easter is one of thousands of small business customers who accuse RBS of wrongdoing. But a new report has given a glimmer of hope.

A report by regulators found RBS had mistreated small businesses. Photo: Johnny Green/PA WireA report by regulators found RBS had mistreated small businesses. Photo: Johnny Green/PA Wire

“This company was dissolved on 29/04/14”.

Five words and three numbers are the only public record of the end of one Norfolk businessman’s dream.

They mask years of heartache, stress, job losses - and the way a bank’s withdrawal of funding can lead to the collapse of a business.

David Easter from Hethel first got into the hotel business in 1997 when he took over the lease of Hotel Wroxham in the Broads village.

Companies who were put into GRG are taking legal action against RBS. Photo: Joe Giddens/PA WireCompanies who were put into GRG are taking legal action against RBS. Photo: Joe Giddens/PA Wire

All went well for the former corporate head-hunter from London.

In 2000 he bought the George Hotel off Newmarket Road in Norwich and with the help of his bank, NatWest, his company, Arlington Hotel Group, kept growing.

By 2006 they had added The George Hotel in Swaffham and Heath Court Hotel in Newmarket. There was talk of growing to 10 hotels in 10 years.

“We aimed to build a string of hotels in market towns in East Anglia,” Mr Easter, 70, said.

Mr Easter's firm ran Hotel Wroxham. File photo from 2011. Photo: Bill SmithMr Easter's firm ran Hotel Wroxham. File photo from 2011. Photo: Bill Smith

Turnover was close to £5m a year, with six-figure profits. The rapid expansion was funded with £4.9m of borrowings from NatWest, but with the company valued at around £8m, the bank was happy to lend.

Mr Easter became friends with his bank manager, hosting dinners and wine tasting for NatWest staff at one of his hotels.

Then in December 2010, his phone rang.

“My bank manager was very apologetic. He said, ‘I’m afraid you have been referred to this GRG’.”

GRG stands for the Global Restructuring Group and was a unit of the Royal Bank of Scotland (RBS) which owned NatWest. It was meant to help struggling businesses turnaround.

But as a report by regulator the Financial Conduct Authority (FCA), published in February, found GRG’s priority was not turning around businesses.

Its aim was to make profit for RBS by charging customers huge fees.

The FCA report described it as a “profit centre” for the bank. Once in GRG, only a tenth of businesses came out again.

“I didn’t understand why they were doing this to me,” Mr Easter said. “They were saying we had broken a covenant on our loan but we had never missed a payment.”

Many businesses alleged that RBS deliberately destroyed their firms to get their assets and improve the bank’s own balance sheet.

The FCA report cleared RBS of that allegation and RBS has repeatedly denied it.

But Mr Easter’s business did get hit with large fees, which eventually tipped it over the edge.

There was a £400 a month “review fee” and a one-off £7,000 fee for security.

The firm was also charged a £150,000 “risk fee” a year and he estimated the company paid around £280,000 in extra fees and interest after being placed in GRG.

The FCA report revealed staff made up figures for fees with little thought.

One GRG manager told the report’s authors – “It’s not rocket science. You know, it would have been just sort of done in your head really.”

Mr Easter said: “They pile you with fees to the point that it is only a matter of time that you are unsustainable as a business.”

The interest rate on the loan was increased by GRG to 3.5pc above the bank rate from 1.25pc.

He said the pressure and stress contributed to the end of his marriage in 2012 and hurt his health.

The bank also asked him to guarantee the loan with his house, but he refused.

Then in 2011 GRG said the loan needed to be restructured as they valued the business at just £4.5m. Mr Easter’s valuers put the figure at £6m, while other independent valuers put it at £5.2m - not including his hotel in Wroxham.

Mr Easter said his hotel firm’s alternative suggestions for loan repayments were dismissed by the bank and he was given a year to pay back almost £5m.

The loan had originally been for 15 years.

“We were just about managing to pay the loan repayments but had to defer VAT and supplier payments,” he said.

He asked for an overdraft facility of £40,000 to pay suppliers. He got it but said he was charged £2,000 for having it.

“By 2012 we were forced into working with auditors PriceWaterhouseCoopers (PwC) to sell the hotels.

“They charged us £10,000 a month plus 3pc of the value of the hotels sold.”

Eventually they sold the hotels in Norwich, Newmarket and Swaffham to pay the bank back.

His main company, Arlington Place Hotels was put into liquidation at the start of 2013 owing creditors thousands of pounds. And five years later, with the scale of the damage done to small businesses by RBS still emerging, he is still hopeful that one day the bank will be held accountable for what he believes being placed into the GRG unit did to his business.

“I had reconciled myself to get nothing out of it because I’m not big enough to fight RBS but it has all been bubbling away now for the last few years.”

His case has been taken on by a group called Bank Confidential which supports bank customers and whistleblowers who believe they have been mistreated.

The treatment of businesses at the hands of GRG has also been taken up in Parliament by Norwich South MP Clive Lewis and North Norfolk MP Norman Lamb.

•RBS compensation?

RBS did not respond to our requests for comment about Mr Easter.

The bank has defended itself for years against allegations it mistreated small businesses which it placed into its turnaround division called GRG.

But after the publication of a report by regulators in February showing mistreatment of firms in GRG an RBS spokesman said it was “deeply sorry” some customers did not receive the experience they should have done.

“We know that the bank got a lot wrong in how it treated some customers in GRG during the financial crisis,” they said.

“That is why we put in place two steps – a complaints process overseen by retired High Court Judge, Sir William Blackburne, and an automatic refund of complex fees – to put things right.”

RBS said its culture and the way it operated today were very different from 2013 and it had accepted the recommendations of the FCA report.

•Do you have a story which needs investigating? Contact our investigations editor Tom Bristow on 01603 77 2834 or email

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