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RBS accused of ruining SMEs for profit

Date Added: 17/12/2013  

City regulators have been given a portfolio of evidence that claims that, in a calculated move, the Royal Bank of Scotland (RBS) has been deliberately forcing small to medium-sized enterprises (SMEs) to collapse in order to make profits.

The business secretary, Vince Cable - who has been one of the most vocal and long-standing critics of the banking industry’s lending practices - handed the report directly to the regulators and the bank due to the seriousness and nature of some of the accusations made within it.

The report was compiled by Lawrence Tomlinson, a businessman and entrepreneur in residence at the Department for Business, Innovation and Skills.

Sir Andrew Large, a former deputy governor of the Bank of England, was provided with a copy of the report as he also conducted an independent review of RBS’s lending failures, in which he noted: "For some, RBS has not succeeded in supporting the SME sector in a way that meets either its own financial targets, or the expectations of customers and external stakeholders.”

Mr Tomlinson compiled his evidence from the hundreds of businesses that approached him after ending up in the bank’s global restructuring group (GRG), and subsequently had their properties taken from them and sold to RBS’s specialist property arm, West Register.

He commented: “There are many devastating stories of how RBS has wrecked good businesses and the ruinous impact this has on the lives of the business owners.”

His report highlights the fact that RBS and Lloyds bank control approximately 60 per cent of all SME business lending in the UK and he does not believe that this is healthy. Mr Tomlinson said: “They are now bigger than ‘too big to fail’, are clearly too big to regulate and have become even more remote from their owners.”

According to the report, the solution is to break up Lloyds and RBS into six banks with a ten per cent market share so that competition is encouraged on the high street.

The accusations that have arisen focus on the reasons businesses are referred to the GRG arm of the bank and how West Register ends up being able to sell off some of the properties.

RBS’s argument is that most of the businesses referred to GRG are successfully turned around. The bank has also promised to review all allegations made by its customers.

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