RBS Needs to Revamp Business-Lending Unit, Large Report Says

Royal Bank of Scotland Group Plc needs to overhaul its lending practices to boost credit to small and medium-sized businesses, according to a report commissioned by the company.

RBS is failing to meet its own targets because of a lack of coordination within the business, poorly trained staff who don’t understand the bank’s lending criteria and are too risk averse and blurred lines of responsibility, said former Bank of England Deputy Governor Andrew Large in the report conducted with consultant Oliver Wyman.

“The bank has failed to meet its own SME lending targets, partly because they were unrealistic and also because of weaknesses in its lending operations,” Large said in the report today. “RBS should look afresh at the manner in which it delivers lending to SMEs, and make sure that the various components of its offering to customers are aligned.”

U.K. lenders, including 81 percent taxpayer-owned RBS, have been criticized by the government for failing to maintain lending to businesses since the 2008 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 bank will write to businesses setting out how much it can lend them and reduce the amount of time a loan application takes, Ross McEwan, chief executive officer of Edinburgh-based RBS, said in a separate statement.

“The Large review shows there is significantly more we can do to expand our lending,” McEwan, 56, said in the statement. “We will address all the issues the report raises.”

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