According to Reuters, the Royal Bank of Scotland has hired external advisers in order to investigate how it treats small businesses.
The investigation will be dealing with the bank’s controversial Global Restructuring Group (GRG), which the Times reported back in May stripped down companies in order to improve RBS’s capital position.
The article stated how the bank “trained hundreds of frontline GRG staff in how to assess the small and mid-sized companies they were restructuring in terms of their impact on the bank’s capital ratio.”
At the time, RBS vehemently denied the allegation that it caused SMEs to default.
However, this external appointment marks a turnaround in attitude. The Times described it as a “significant concession” that would trigger “a potential multi-million pound compensation bill”.
Senior RBS executives told Reuters that these particular allegations have proven to be much more damaging than any previous investigations the bank had to go through.
“The one that is most reputationally damaging for us is the GRG case, suggesting we have acted badly towards our SME (small-and-medium-enterprise) customers,” a senior source at the bank told Reuters this month.
There is, therefore, an air of immediacy about the situation. RBS executives want to deal with this issue as quickly as possible.
Reuters also said that it was the board of director’s decision to hire external advisers “to ensure its responses to the FCA were not influenced by concerns about the bank’s reputation and to identify any inconsistencies with the FCA’s findings”.
The external advisers will aid RBS’s own probe and make sure that is running concurrently with an inquiry by Financial Conduct Authority (FCA), Britain’s financial regulator.