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Vince Cable sends report on RBS conduct to regulators

A report into claims Royal Bank of Scotland put viable businesses into default so it could make more profit has been passed to financial regulators by Business Secretary Vince Cable.

The report, to be published today, has been written by Lawrence Tomlinson, one of Cable’s key advisers.

The Sunday Times, which has seen the report, quotes it as saying: “The bank artificially distresses an otherwise viable business and through [its] actions puts [the business] on a journey towards administration, receivership and liquidation.”

Cable has asked the FCA and the Prudential Regulation Authority to review the evidence.

The allegations focus on a part of RBS called the Global Restructuring Group, which was set up to help struggling companies.

But firms have told Tomlinson GRG imposes fines, hikes interest rates and withdraws loans. They claim RBS’ property arm West Register then buys their properties at a fraction of their value. 

Tomlinson told the BBC: “I feel really sick sometimes. It is really disturbing. It is ruining people’s businesses for sure, and in some cases having a huge impact on their personal lives too, even leading to family breakdown.”

Cable said: “Some of these allegations are very serious and I am waiting for an urgent response as to what actions have been taken.

“I am however confident the new management of RBS is aware of this history and is determined to turn RBS into a bank that will support the growth of small and medium sized businesses.”

In a statement, RBS said: “In the boom years leading up to the financial crisis, the over-heated property development market became a major threat to the UK economy.

“RBS did more than its fair share to fuel this and commercial property lending was one of the key drivers of our near collapse as valuations rapidly plummeted.

“Facing up to these mistakes has been a difficult, but essential part of making RBS a safe and strong bank once again. That has been one of GRG’s main tasks. GRG successfully turns around most of the businesses it works with, but in all cases is working with customers at a time of significant stress in their lives. Not all businesses that encounter serious financial trouble can be saved.” 

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Mr. Tomlinson, produce some evidence that this has occurred and it would be truly scandalous. Otherwise you yourself are adding to the “climate of fear” that you have claimed exists.

    I respect the fact that you are actually a hugely successful entrepreneur but that in itself makes you less than impartial.

  2. Viable business? I think many people have an inflated view of their business, its prospects and how successful it really is. I have also seen the other side of the coin where firms have banked with HMRC and the local bank, folded and left the liabilities with the bank.
    But I would indeed like to see the evidence and can well believe there were a few naughty things going on.

  3. A few naughty things going on, Sam. This has been going on for years. Some 25 years ago I was General Manager of a small ‘ish light engineering business in Enfield. During that recession (1990) it was easy. Most small businesses had o/d’s due to the cash flow problems associated with that size of business and all the bank had to do was call the loan in, 48 hours notice in some cases, and then for most small businesses it was ‘goodnight Vienna’. Bank moved in, capitalised the assets,sold them and in some cases made a tidy profit. These actions by the banks produced a desert of small light engineering companies in that Borough. Thousands of people lost their jobs – Enfield now is mostly retail parks and light engineering in that borough a thing of the past.

    I would like to say that they are not the Messiah, they are very naughty boys but I am afraid it goes further than that.

    Magnify that borough across the Uk and this has the capacity to cause a massive recession.

    Incidentally, the business that I was in had as it’s bank a RBS offshoot.

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