RBS share price dips as documents reveal malpractices
Royal Bank of Scotland (LON:RBS) has put struggling firms on a path to bankruptcy for its own gain, leaked documents have revealed. The confidential files, passed by a whistleblower to BuzzFeed News and BBC Newsnight, show that the blue-chip lender bought up assets cheaply from small business it claimed to be helping.
RBS’ share price has tumbled into the red in today’s session, having lost 1.54 percent to 179.10p as of 08:40 BST. The stock is underperforming the FTSE 100 index which has climbed into positive territory and currently stands 0.03 percent higher at 7,046.60 points. The bank’s shares have lost almost half of their value over the past year, and are some 40 percent down in the year-to-date.
The leaked documents show that more than 12,000 companies were pushed into RBS’ controversial “turnaround” division — Global Restructuring Group (GRG) — in the wake of the 2008 financial crisis. In what was described by an RBS executive as “Project Dash for Cash”, staff were rewarded with higher bonuses based on fees collected for “restructuring” business customers’ debts.The files also show that where business customers had not defaulted on their loans, bank staff could find a way to “provoke a default”.
The documents support controversial allegations in a report three years ago by the government’s then entrepreneur in residence Lawrence Tomlinson. He was quoted by BBC as saying: “These documents are massively significant in that they finally, for me, prove what was in my report. I think RBS should just come clean and say yes, GRG was a profit centre and it did act against the best interest of the UK as a whole.”
RBS admitted that it had let some small business customers down in the past but denied it deliberately caused them to fail. The bank told Newsnight: “RBS has been very clear that GRG’s role was to protect the bank’s position… 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. Since that time, RBS has become a different bank and significant structural and cultural changes have been put in place, including how we deal with customers in financial distress.” The bank further insisted that a detailed review of millions of pages of documents had found no evidence that “the bank artificially distressed otherwise viable SME businesses or deliberately caused them to fail.”
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