RBS Hires Ex-BOE Deputy Governor to Review Business LendiLiam Vaughan
Royal Bank of Scotland Group Plc hired former Bank of England Deputy Governor Andrew Large to lead a review of lending to small and medium-sized businesses.
Large has been appointed alongside consultant Oliver Wyman to “undertake a thorough and independent review of lending standards and practices” at RBS and its NatWest unit, the Edinburgh-based lender said in a statement on its website today. RBS has earmarked 20 billion pounds ($30 billion) in surplus deposits to “support the economy,” it said.
“There is a disconnect between what the bank says it is doing on lending, and what many businesses say they experience on the ground,” Large said in the statement. “That is why we have been asked to conduct an independent review to establish what is going on, and what steps can be taken.”
U.K. lenders have been criticized by the government for failing to maintain lending to businesses since the financial crisis as they boost capital reserves. The Bank of England earlier this year extended its plan to provide cheap loans to companies and consumers and make credit available for small firms to help support the economy.
The extension allowed banks to borrow 10 pounds next year for every 1 pound they lend to small companies in 2013. If they wait to extend the loan until next year, the amount they can borrow under the plan is cut by half to 5 pounds for every pound loaned. Banks can borrow 1 pound for every pound loaned with the rest of the program, according to the Treasury.
“Demand for lending remains a challenge, but we want to do more than just wait for demand to materialise,” said Chris Sullivan, RBS’s CEO of U.K. Corporate Banking. “We want to play our part in securing the recovery. If there are loans that we could and should be making, but are not, then that will change. If there are things we can do better, we will.”
The government had “not been involved at all” in the decision to conduct the review, Sullivan said in an interview with Bloomberg TV in London today.
“Businesses have been very nervous about the environment,” he told Bloomberg TV’s Francine Lacqua. “The biggest issue has been confidence. We and the government and everyone else need to do what we can to address that confidence.”
The review will be published later this year, the company said.