Report into RBS passed to watchdogs
Business secretary Vince Cable has passed a report that claims RBS has put some “good and viable” businesses into default financial regulators.
Government advisor, Lawrence Tomlinson has released a report today which focuses on the way that RBS has been operating its Global Restructuring group (GRG).
The GRG is the ‘turnaround’ division of RBS which takes loans viewed as risky. The GRG is understood to have the power to scrap loan deals and charge penalties.
This has proven to be a profitable system as the fees bring in further money to the bank and if the business goes under the assets can be sold off through RBS’ property division West Register.
However the Tomlinson report suggests that some small businesses owners feel that companies are being purposely pushed into the GRG by RBS to turn a profit.
The report has been passed onto regulators the Fincial Conduct Authority and the Prudential Regulation Authority for further scrutiny.
RBS said in a statement released today: "In the boom years leading up to the financial crisis, the over-heated property development market became a major threat to the UK economy.
"RBS did more than its fair share to fuel this and commercial property lending was one of the key drivers of our near collapse as valuations rapidly plummeted.
"Facing up to these mistakes has been a difficult, but essential part of making RBS a safe and strong bank once again."
The shadow business secretary, Chuka Umunna, said: "The claims made by Lawrence Tomlinson against RBS' Global Restructuring Group are extremely serious indeed.
"To artificially distress otherwise successful businesses in order to seize their assets and profit would be utterly scandalous and deplorable. It's right that the FCA [Financial Conduct Authority] and PRA [Prudential Regulation Authority] look into the claims as a matter of urgency."
The South West Green Party’s member Professor Molly Scott Cato said: “This bank, which we, the taxpayers of this country, bailed out and own, has been found actively working to destroy small businesses and profit from their demise. It has long been clear that the financial sector in this country is sucking the lifeblood out of our economy, but the fraudulent nature of RBS's business activity takes us to a new level of revulsion”.
“The Green Party is calling for the Royal Bank of Scotland to be broken up and turned into a system of local community banks based on the German banking system. Under such a system each local bank could include local business people and others with an understanding of local economic needs on its Board. It would still lend at interest but do so in a way that served its local economy.
“A system of local community banks has been the engine of the German economy, supporting a thriving small and medium-sized enterprise sector. These shocking, and possibly illegal, revelations about a bank that owes its existence to public support and is 80% owned by the public, quite frankly beggars belief. It is time for a community banking revolution and only the Green Party has the resolve to bring this about.”
