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Vince Cable refers report into RBS treatment of business to watchdogs Vince Cable refers report into RBS treatment of business to watchdogs
(35 minutes later)
Business Secretary Vince Cable has referred a report about how RBS dealt with small business to City regulators.Business Secretary Vince Cable has referred a report about how RBS dealt with small business to City regulators.
It is claimed RBS put some "good and viable" businesses into default so it could make more profit from them, in a report by government adviser Lawrence Tomlinson to be released on Monday.It is claimed RBS put some "good and viable" businesses into default so it could make more profit from them, in a report by government adviser Lawrence Tomlinson to be released on Monday.
The findings have been sent to the Financial Conduct Authority and the Prudential Regulation Authority.The findings have been sent to the Financial Conduct Authority and the Prudential Regulation Authority.
RBS said it was already committed to an investigation into customer treatment.RBS said it was already committed to an investigation into customer treatment.
The allegations centre on the bank's Global Restructuring Group (GRG) lending division, which specialises in handling loans seen as being more risky.The allegations centre on the bank's Global Restructuring Group (GRG) lending division, which specialises in handling loans seen as being more risky.
The Tomlinson report will say that putting a business into the GRG generates revenue for the bank through fees, increased profit margins and the purchase of devalued assets by their property division, West Register.The Tomlinson report will say that putting a business into the GRG generates revenue for the bank through fees, increased profit margins and the purchase of devalued assets by their property division, West Register.
'Really disturbing''Really disturbing'
Mr Tomlinson told the BBC what he had uncovered through talking to businesses had made a big impact on him.Mr Tomlinson told the BBC what he had uncovered through talking to businesses had made a big impact on him.
"I feel really sick sometimes. It is really disturbing," he said."I feel really sick sometimes. It is really disturbing," he said.
"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.""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."
The bank said in a statement: "In the boom years leading up to the financial crisis, the over-heated property development market became a major threat to the UK economy.The bank said in a statement: "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."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.""Facing up to these mistakes has been a difficult, but essential part of making RBS a safe and strong bank once again."
BBC business correspondent Joe Lynam says that if it is shown that RBS had a deliberate strategy of liquidating their own customers, it could open the bank to extensive legal action.BBC business correspondent Joe Lynam says that if it is shown that RBS had a deliberate strategy of liquidating their own customers, it could open the bank to extensive legal action.
An RBS spokesman 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.
"We are already committed to an inquiry to investigate how customers are treated by RBS when facing financial difficulties and ensure that we provide them with appropriate support."
The 81% state-owned bank's report into its own lending practices to small and medium sized companies by the former Bank of England deputy Governor Sir Andrew Large will also be published on Monday.The 81% state-owned bank's report into its own lending practices to small and medium sized companies by the former Bank of England deputy Governor Sir Andrew Large will also be published on Monday.
RBS's new chief executive Ross McEwan has already said this report will make for uncomfortable reading, but promised to implement its findings in full.RBS's new chief executive Ross McEwan has already said this report will make for uncomfortable reading, but promised to implement its findings in full.