RBS Denies Deliberately Forcing Small Businesses to Collapse
Royal Bank of Scotland Group Plc denied deliberately forcing the collapse of small-business customers in the wake of the financial crisis after two news organizations published leaked internal documents.
The majority taxpayer-owned lender sought to make more money from small-and medium-sized enterprises that ran into trouble during the financial crisis as part of a project code-named “Dash for Cash,” according to documents published Monday by the BBC and Buzzfeed News. While Edinburgh-based RBS said in a statement it failed to meet its own standards and let some customers down, it denied deliberately forcing their collapse.
Britain’s largest lender to businesses is being probed by the U.K.’s Financial Conduct Authority after a government-commissioned report said the bank “artificially” distressed otherwise viable businesses in order to buy their assets at a discount. The accusation is rejected by the bank and two separate investigations it sponsored.
“We have seen nothing to support the allegations that the bank artificially distressed otherwise viable SME businesses or deliberately caused them to fail,” RBS Chief Conduct and Regulatory Affairs Officer Jon Pain said in the statement. “In the aftermath of the financial crisis we did not always meet our own high standards and we let some of our SME customers down.”
RBS required a 45.5 billion-pound ($56 billion) bailout from British taxpayers to avert failure during the financial crisis, as commercial and real estate lending soured while it recorded deep losses at its investment bank. The bank has since offloaded assets worth more than 1 trillion pounds as it shrinks from a global titan to focus on domestic consumer and business lending.
RBS’s former Deputy Chief Executive Officer Chris Sullivan, who now runs commercial lending operations at Banco Santander SA’s U.K. unit, was criticized by legislators for “willfully obtuse” evidence given to Parliament in 2014 relating to its Global Restructuring Group. While RBS later that year apologized for “any confusion” in the evidence, it reiterated that GRG didn’t boost profits at the expense of clients.
The FCA said last week it received the final report on RBS’s treatment of small firms from consulting firm Promontory Financial Group LLC and the accounting firm Mazars, which it had asked to review the bank’s treatment of business customers. There are now a “number of steps number of steps for the FCA to complete before we are in a position to share our final findings,” the watchdog said in a statement.
View original Bloomberg article