Royal Bank of Scotland (RBS) has rejected accusations that it engineered the collapse of SME clients in order to make a profit.
Speaking to MPs on the Treasury select committee, Derek Sach, head of the bank’s Global Restructuring Group (GRG), defended the bank by saying, “generally [I] do believe we do good overall” and insisting that RBS “would never get any advantage from destroying a customer.”
Last November, the entrepreneur and former government adviser Laurence Tomlinson released a report claiming that RBS had deliberately put some of its SME clients out of business in order to buy up their assets, building up a £3.2bn property portfolio in the process. The controversial portfolio has now been sold.
The bank has also been accused of selling complex loans to small businesses without making clear some of their more onerous financial terms, such as 25% break clauses. Of the 8300 customers sold fixed loans, 550 (15%) have issued complaints, around 300 of which are likely to be upheld, according to RBS.
The bank, which is 81% tax-payer owned, is currently under investigation by the Financial Conduct Authority, which has appointed Mazars and the Promontory Financial Group to judge the veracity of Tomlinson’s accusations. Last month, RBS announced that it had been cleared of all allegations by Clifford Chance, the law firm that the bank commissioned to run a parallel investigation into its activities. Whilst Clifford Chance concluded that it could find no evidence of fraud, it did criticise the bank for a lack of transparency and “insensitive, rude or aggressive behaviour” towards clients.
“There can’t be all this smoke without some fire,” Andrew Tyrie, chairman of the Treasury select committee, told the Huffington Post. “There have been widespread concerns about RBS’s lending practices.”