RBS squeezed struggling businesses to boost profits, leak reveals

worldtraveller

Royal Bank of Scotland secretly tried to profit from struggling businesses, leaked documents show.

The bank bought up assets cheaply from failing businesses it claimed to be helping, the confidential files reveal.

Staff could boost their bonuses by finding firms which could be squeezed in what it called a "dash for cash".

RBS said it had let some small business customers down in the past but denied it deliberately caused them to fail.

The cache of documents, passed by a whistleblower to BuzzFeed News and BBC Newsnight, support controversial allegations in a report three years ago by the government's then entrepreneur in residence Lawrence Tomlinson.

He accused the taxpayer-owned bank of deliberately putting viable businesses on a path to destruction while aiming to pick up their assets on the cheap.

The documents show the bank's efforts to make money out of struggling businesses were ramped up after the 2008 financial crisis.

BBC News

I remember watching a TV documentary at the time about the 'Global Restructuring Group' (GRG) and some of the business people it affected, and I must say that it all looked very 'suspicious' to me then, even more so now.

stator

And as we own RBS, we're going to have to foot the bill for all of the lawsuits and settlements.

Eric_Disley

In an ideal world there'd be prosecutions.

The Tomlinson report described how RBS targeted businesses they wanted to add to their portfolio, changed the conditions of their business loans without warning, the business couldn't avoid defaulting, RBS penalised them, drove them to bankruptcy and then snapped them up at a fraction of their market value.

RBS commissioned an "independent report" which concluded that Tomlinson was wrong. The leaks confirm he was right.

CLAPTON

if and I say if the substance is true, then a few should go to jail and the business people who lost out fully compensated

Thrugelmir

stator wrote: »

And as we own RBS, we're going to have to foot the bill for all of the lawsuits and settlements.

Meltdown beckons.

worldtraveller

After months of wrangling, MPs have released a report by the financial regulator which said a unit of RBS mistreated thousands of small firms.

The Global Restructuring Group (GRG) was marketed as an expert service that could save a business, but according to the report took "inappropriate" action.

Nicky Morgan, chair of the Treasury Committee, said the findings in the report were "disgraceful".

RBS said it was "deeply sorry" for its treatment of businesses in the GRG.

BBC News

RBS Group's treatment of SME customers referred to the Global Restructuring Group (PDF file link)

Disgraceful indeed, but no surprise to me, based on reports that I read and saw at the time!

An RBS spokesperson said, "The culture, structure and way RBS operates today have all changed fundamentally since the period under review and we have made significant changes to deal with the issues of the past, including how we treat customers in financial distress.

"We have accepted all the relevant recommendations from the report and our focus is now on rebuilding trust and supporting our customers."

Yeah, OK, right! Let's just see!

Nick_C

What profits?

westernpromise

This is what happens when you let Labour regulate the City. Having dismantled an effective previous regime they replaced it with the FSA, who were, er, where, exactly, in all this?

vivatifosi

westernpromise wrote: »

This is what happens when you let Labour regulate the City. Having dismantled an effective previous regime they replaced it with the FSA, who were, er, where, exactly, in all this?

Or the even bigger issue of where was the oversight, given that it was taxpayer owned at the time?

westernpromise

It wasn't taxpayer owned before 2008, at which time the practice was already in place, according to the OP.

Pennywise

westernpromise wrote: »

It wasn't taxpayer owned before 2008, at which time the practice was already in place, according to the OP.

Maybe not state owned, but banks were supposed to be regulated. Yet another case where the state regulator didn't do its' job properly. Not only should banking staff/managers be prosecuted, but so should the staff/managers in the regulatory body who have been caught napping.