Royal Bank of Scotland is facing withering claims over the way it treats business customers, including allegations that viable companies are being forced into default so the bank can seize their properties at knock-down rates.
After years of insisting it is supporting the recovery, RBS is braced for two separate reports that claim it is turning away creditworthy businesses seeking loans and is even deliberately putting good companies into default to make a profit from them.
The most damaging claims are made by Lawrence Tomlinson, an adviser to business secretary Vince Cable, who says RBS has been guilty of the “systematic abuse” of corporate customers since it was rescued by the taxpayer in 2008.
Mr Cable has described the allegations as “very serious” and said he was “appalled” by what Mr Tomlinson had found. He has referred to the Financial Conduct Authority and the Prudential Regulation Authority, the City regulators, Mr Tomlinson’s claim that the bank has exploited the problems facing its customers, including transferring them from the main bank into its Global Restructuring Group, which specialises in “risky” loans.
George Osborne said on Monday that the reports about RBS were “shocking”.
“We are actively trying to seek out these problems, we are not trying to brush them under the carpet,” the chancellor said.
Mr Tomlinson – who produced the report on his own initiative – claims that once a business is transferred into the GRG, it is hit with high fees and may then find its devalued assets taken over by the bank’s own West Register property division.
The entrepreneur says he feels “sick” at the way some “vibrant businesses” have been treated. RBS says it is simply trying to unwind some of its risky commercial lending to make the bank safe and strong again.
It also says that while “GRG successfully turns around most of the businesses it works with”, it acknowledges that some of those encountering “serious financial trouble” cannot be saved.
Meanwhile, Sir Andrew Large, former deputy governor of the Bank of England, has published his final report into RBS’s business lending.
Ross McEwan, the bank’s new chief executive, has promised to learn the lessons of the Large report, which was commissioned by the bank. A new plan for the way RBS treats its customers will be announced next February.
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