

RBS shuts down startup accounts (Smarkets and others) - swombat
http://www.kernelmag.com/features/report/1360/rbs-continues-its-war-on-start-ups/

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DrJokepu
It seems to me that RBS was very clear about the issue, they simply don't want
to deal with gambling. It's a valid debate whether this is a reasonable or
acceptable thing to do but it's massively misleading to conclude that this has
anything to do with the company being a startup.

Personally, I think it should be obvious to everyone that gambling is a rather
low profile business and anyone who decides to do business in such an area
should be prepared for obstacles like this; I don't see how running to the
press would help at all when the public opinion about your industry is not
exactly very high.

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ocirion
I imagine you are talking from a US perspective. I don't believe there is a
negative perception of gambling startups in the UK / Europe, especially if you
consider success stories such as Betfair.

What makes gambling low profile ? Its a business, that has a unique model that
turns a good profit. Why should it be treated differently from any other
startup?

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wladimir
_Why should it be treated differently from any other startup?_

A lot of people have the opinion that gambling does not produce "value", and
that it makes people addicted to it, while running them into the ground
financially.

I'm not sure about the rest of Europe, but here in The Netherlands it's not
even allowed to start a gambling site, as the state has an absolute monopoly
on it (Holland Casinos).

~~~
ocirion
That would be like banning liquor stores or corner shops selling cigarettes.
The monopoly is because the government wants a piece of it. The potential of
gambling sites to make huge amounts of money is why the government takes any
interest. They will restrict them and/or tax them to fill their own coffers.

~~~
Leynos
As a parallel example, there are states in America where the only off-licences
(liquor stores) permitted to operate are the state run monopoly.

My understanding of the reasoning behind this is centred around morality,
although I imagine there's also a financial incentive for the state to
maintain this control.

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sjtgraham
I previously worked as a developer for a startup regulated by the Gambling
Commission (which coincidentally was formerly situated in the same building
and adjacent to the Smarkets team, both having raised money from Passion
Capital), and we experienced the same problem with Barclays, i.e. a letter
informing us our custom was no longer welcome.

It's not a question of Smarkets being a startup that their account has been
closed, as the title suggests. I believe that the current British banking
climate is overtly hostile to companies of a gambling nature, unless they are
very large and well established. My previous employer found it extremely
difficult to obtain even basic banking services after being shut out by
Barclays. I'm ignorant of the process which lead the bank to deem Smarkets
inordinately risky, but it's somewhat unconscionable that a nationalised bank
should treat them in this way. RBS should be stimulating economic growth,
facilitating job creation, and ultimately creating value for the economy;
shutting the door on Smarkets, a viable business is incompatible with that
notion.

As I say, I do not have a full appreciation of the bank's logic for this
decision, nor do I know Smarkets' position, exposure, etc. However, I have
known Smarkets for some two years and seen them grow steadily and reliably
over that period, without a blip. I certainly find the bank's decision
surprising.

~~~
Isofarro
I just find it laughable that RBS is effectively admitting their understanding
of risk management is very low indeed. That their organisation didn't mitigate
against the risk of subprime mortgage defaults that would turn one of their
main assets into a valueless piece of paper; and yet close down accounts of
Smarkets without much of an assessment.

I'm not a risk taker by nature, and Smarket's approach to mitigating
exposure/risks is an interesting, yet soundly logical. Bailed out banks like
RBS/Natwest can learn a thing or two from Smarkets of how to resposibly manage
risk.

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ctz
This article describes a single affected start-up, but begins with "Why are so
many start-ups being hit with account closures from banks in the RBS group?"

That seems a little intellectually dishonest.

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mseebach
> _RBS’s actions are all the more unforgivable given that the bank is now
> mostly owned by taxpayers_

Taxpayers didn't bail out RBS because of a deeply felt desire to help British
businesses with banking facilities, but because it was deemed at the time that
allowing it to crash would hurt the taxpayer more than the cost of the
bailout.

The only priority for the government in RBS is to shed any and all unnecessary
risk from its balance sheet and sell its shares as soon as possible.

I don't envy Smarkets' situation, but insisting that RBS behaves in a certain
way different from this is effectively throwing good money after bad.

~~~
Isofarro
RBS failed because it contained a portfolio of financial assets that overnight
became valueless. That value just disappeared.

I don't see how that situation is related to a company whose revenue stream is
a commission on bets placed. If the number of bets placed is zero, Smarkets
doesn't end up with an asset that goes from billions of dollars of value to
zero, and creating a massive black hole in a Balance Sheet.

~~~
mseebach
I wasn't reacting to NatWest's treatment of Smarkets, but to the assertion
that being taxpayer owned somehow obliges RBS/NW to treat them in a different
manner.

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Mvandenbergh
RBS has significant operations in the United States and the US has a history
of playing a little fast and loose with jurisdictions when it comes to going
after online gambling and anything that looks like it.

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arethuza
That picture is of ex-Sir Fred Goodwin (AKA "Fred the Shred"), who hasn't been
RBS CEO since 2008.

~~~
getsat
And is losing his knighthood for being a toolbag.

~~~
retube
s/toolbag/scapegoat

