And, ultimately, they could push the business into insolvency and force the customer to sell off its assets. That was when West Register stepped in.

The bank’s public position is that when an asset was being sold to pay down a customer’s debt to RBS, the bank acted only as a “bidder of last resort” in cases where there were no other viable buyers. But a document describing the control structure of GRG declared: “West Register is mandated to consider purchasing any property asset where the property loan is distressed and where the property is being offered for sale.” The division was “particularly interested in assets where there is potential to increase value”, the controls document said, and “the only assets West Register will not consider are those valued below £250,000”.

RBS has also insisted that strict Chinese walls stopped any conflicts of interests arising when West Register set its sights on the assets of troubled businesses supposedly receiving “intensive care” in GRG. As a “general rule”, the property division’s policy and procedures manual stated, if there were other lenders with debt to recover from a sale, West Register “should be provided with no more information about the charged assets than any other bidders”. But then the manual went on to apparently contradict itself. As long as the loan documents were in “bank standard format”, there was “no confidentiality obligation owed to the customer which would restrict disclosure of information to WR,” it said. That meant that GRG managers could disclose information about the customer’s “debt and security package” as well as “any defects or downsides” affecting the property, “even if these are not being disclosed to other bidders”.

If there were no other lenders in the mix, West Register’s path to acquisition was even clearer. Then, the policy manual stated, “a more pragmatic line can be taken and GRG may share information about the charged assets” without any restrictions. What’s more, in these cases, it wasn’t even necessary to open the bidding to others, which, of course, might have given the customer a better price for its assets. The manual stated that where there were no other lenders in the mix, “a full marketing process is not required”.

RBS said this part of the policy only referred to occasions when the customer was prepared to agree to a deal with West Register. But the Clifford Chance report had flagged concerns about what GRG called “consensual sales” by its “distressed” customers to its own property arm – warning that they could be deemed “unfair” given that the bank “has additional leverage in any negotiation” because it controlled the seller’s loans and bank accounts.

In the event that West Register did have to go up against other bidders in an auction, the policy document shows, the bank’s property division would be given a helping hand. The manual states West Register “should bid blind for a property with no knowledge of external bids” in order to “ensure the bank cannot be accused of self-dealing”. But it also reveals that GRG managers were given “indicative bids” from other potential buyers in advance of an auction, and they were instructed to give West Register “guidance” on whether its bid was likely to be “acceptable”. West Register would only be allowed to bid once, so the private advice helped to make sure it could pitch the price right on the night. The bank’s property arm was focused on acquiring properties at a low enough value to make a tidy profit on their resale, so if it knew an asset was going to sell cheap and bumped up its planned bid a bit to be sure to pip the competition, it could still get a great bargain. If, on the other hand, a property was more likely to sell for closer to its fair value, and West Register didn’t want to pay that price, it would still submit “underpinning” bids to ensure no one else got too much of a bargain. Either way, RBS won.

Clifford Chance would later argue that the bank got no advantage from acquiring customers’ assets cheaply when they were sold to pay back a debt because “any gain to West Register will be offset by a corresponding under-recovery on the customer’s loan”. But this statement overlooked the future capital gain West Register stood to make when the assets were resold, as well as GRG’s power to perform a “full cash sweep” of the business to recover the rest of its money. RBS said West Register only acquired 20% of the properties it bid for – though the files suggest 34% of its bids were successful in 2012 – and said it had only been able to resell a handful of properties for more than the original loan had been worth.

And the documents reveal Sach’s unit had another major incentive, beyond turning a profit, to tip customers’ property assets out of the bank’s loan book and into West Register.

In the wake of the crash, new global banking rules had increased the amount of capital banks were required to hold in reserve as a buffer against potential losses on risky assets – and property loans carried a particularly high “risk weighting”. So for almost every business whose loan was secured against property, the bank had to freeze a whole load of cash in order to satisfy the regulators it could cope in the event of a default. This regulatory capital was effectively dead money that the bank could not invest elsewhere – a serious impediment to trade.

But by demanding repayment of property loans, the bank not only recovered the money it had lent, it also got back a lot of the capital it was having to hold in reserve. That was a big double win for GRG, because freeing up this regulatory capital was one of the most important metrics by which its success was measured after the crash, secret financial documents show. After the bailout, more than 500 GRG relationship managers were trained to calculate “the capital impacts of restructures”, figuring out how they could release as much regulatory capital as possible as they took decisions about a business’s future. And that was how many firms with property loans found themselves being forced to sell up to repay the bank.

By going on to acquire those properties for West Register, the bank converted what had been risky loan exposures tying up regulatory capital to valuable owned assets that it could resell later at a profit.

RBS still had to retain some capital against properties that it owned, so GRG deployed accounting wizardry to minimise that burden. Instead of the bank itself holding these properties, GRG had set up a network of “special purpose” subsidiaries under the West Register umbrella to hold them, and classified them as “ancillary”. Even though RBS had purchased the properties and ultimately controlled their fate, this manoeuvre allowed the bank to keep these properties off its main balance sheet and cut down the amount of capital it was required by regulators to hold as a buffer against losses.

Sach’s strategy was as masterful as it was multifaceted, and it paid off big time. By 2011 GRG had reached the peak of its powers, racking up profits of £1.2 billion in that year alone. West Register and SIG acquired combined owned assets worth more than £4 billion, and financial documents classified “secret” reveal that on top of those material gains, GRG offloaded enough risk-weighted assets to free up tens of billions of pounds of core capital from the bank’s reserves.

But even as the bank celebrated GRG’s most profitable year yet, Sach’s masterplan began, slowly, to unravel.