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| Version 1 | Version 2 |
|---|---|
| Vince Cable sends report on RBS conduct to regulators | Vince Cable sends report on RBS conduct to regulators |
| (35 minutes later) | |
| Business Secretary Vince Cable has sent a report into how RBS dealt with some small firms to City regulators. | Business Secretary Vince Cable has sent a report into how RBS dealt with some small firms to City regulators. |
| The report claims that the bank put some "good and viable" businesses into default so it could make more profit. | The report claims that the bank put some "good and viable" businesses into default so it could make more profit. |
| Mr Cable told the BBC that the evidence against RBS, compiled by government adviser Lawrence Tomlinson, looked "solid". | Mr Cable told the BBC that the evidence against RBS, compiled by government adviser Lawrence Tomlinson, looked "solid". |
| The bank said that it was already committed to an investigation into customer treatment. | The bank said that it was already committed to an investigation into customer treatment. |
| Separately, a report by Sir Andrew Large into RBS's lending to small businesses, said the bank should overhaul its practices and procedures in order to provide more help. | |
| Mr Tomlinson's report, released on Monday, has been sent to the Financial Conduct Authority and the Prudential Regulation Authority. | Mr Tomlinson's report, released on Monday, has been sent to the Financial Conduct Authority and the Prudential Regulation Authority. |
| 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 says that putting a business into the GRG generated revenue for the bank through fees, increased profit margins and the purchase of devalued assets by their property division, West Register. | The Tomlinson report says that putting a business into the GRG generated revenue for the bank through fees, increased profit margins and the purchase of devalued assets by their property division, West Register. |
| The practice of removing a bad debt from a bank's books is not an unreasonable one, particularly as major lenders have been trying to move away from riskier assets. | The practice of removing a bad debt from a bank's books is not an unreasonable one, particularly as major lenders have been trying to move away from riskier assets. |
| But Mr Tomlinson told the BBC that there was a perception among small businesses that they were being "purposefully distressed" in order to get them into the GRG, which, even if wrong, should be addressed by RBS. | But Mr Tomlinson told the BBC that there was a perception among small businesses that they were being "purposefully distressed" in order to get them into the GRG, which, even if wrong, should be addressed by RBS. |
| Mr Cable said his department would not take the report at "face value", but added: "We are pretty confident that the evidence is solid." | Mr Cable said his department would not take the report at "face value", but added: "We are pretty confident that the evidence is solid." |
| He said: "We want to be absolutely clear that this kind of thing is not going on today. | He said: "We want to be absolutely clear that this kind of thing is not going on today. |
| "I am, however, confident that 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." | "I am, however, confident that 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." |
| 'Really disturbing' | 'Really disturbing' |
| Mr Tomlinson, an entrepreneur, acted independently of government in producing the report, and did not set out to look solely at RBS. | Mr Tomlinson, an entrepreneur, acted independently of government in producing the report, and did not set out to look solely at RBS. |
| But he said what he had uncovered through talking to businesses had put RBS and its GRG into focus. | But he said what he had uncovered through talking to businesses had put RBS and its GRG into focus. |
| He also said conversations with affected businesses had made a big impact on him. | He also said conversations with affected 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." |
| He told the BBC later that he had uncovered some "horrific stories" suggesting that the conduct at RBS was "systematic and institutional". | He told the BBC later that he had uncovered some "horrific stories" suggesting that the conduct at RBS was "systematic and institutional". |
| The report found: | The report found: |
| 'Mistakes' | 'Mistakes' |
| The bank said in a statement: "In the boom years leading up to the financial crisis, the overheated 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 overheated 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." |
| The shadow business secretary, Chuka Umunna, said: "The claims made by Lawrence Tomlinson against RBS' Global Restructuring Group are extremely serious indeed. | The shadow business secretary, Chuka Umunna, said: "The claims made by Lawrence Tomlinson against RBS' Global Restructuring Group are extremely serious indeed. |
| "To artificially distress otherwise successful businesses in order to seize their assets and profit would be utterly scandalous and deplorable. It's right that the FCA [Financial Conduct Authority] and PRA [Prudential Regulation Authority] look into the claims as a matter of urgency." | "To artificially distress otherwise successful businesses in order to seize their assets and profit would be utterly scandalous and deplorable. It's right that the FCA [Financial Conduct Authority] and PRA [Prudential Regulation Authority] look into the claims as a matter of urgency." |
| BBC business correspondent Joe Lynam says that if it is shown that RBS deliberately put viable companies out of business, it could open the bank to extensive legal action. | BBC business correspondent Joe Lynam says that if it is shown that RBS deliberately put viable companies out of business, it could open the bank to extensive legal action. |
| 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. |
| 'Much for RBS to do' | |
| Meanwhile, Sir Andrew's report into lending to small firms, also published on Monday, said there had been confusion over lending objectives and strategy. | |
| The bank must "ensure clear and simple lines of responsibility, and reduce organisational fragmentation," the report said. Currently, lending is split across several divisions. | |
| The report also recommends that RBS conduct an inquiry into how it treated customers whose firms hit problems. | |
| The report, which was commissioned by RBS, said: "There is much for RBS to do, and they have committed to undertake that." |