RBS Denies Deliberately Forcing Small Businesses to Collapseby
U.K. bank had project code-named ‘Dash for Cash,’ BBC Says
Lender says leaks don’t support allegations against bank
Royal Bank of Scotland Group Plc denied deliberately forcing the collapse of small-business customers in the wake of the financial crisis after two news organizations published leaked internal documents.
The majority taxpayer-owned lender sought to make more money from small-and medium-sized enterprises that ran into trouble during the financial crisis as part of a project code-named “Dash for Cash,” according to documents published Monday by the BBC and Buzzfeed News. While Edinburgh-based RBS said in a statement it failed to meet its own standards and let some customers down, it denied deliberately bringing them to ruin.
British lawmakers heaped criticism on the bank later on Monday and urged the Financial Conduct Authority to publish the findings of an almost three-year-old probe into the bank’s treatment of small-business customers. The allegations date to a 2013 government-commissioned report that said the bank “artificially" distressed otherwise viable businesses in order to buy their assets at a discount and charge them fees.
“If laws have been broken, individuals must be held responsible,” Jonathan Reynolds, Labour’s shadow City minister said in an e-mailed statement. “These shocking revelations are a damning indictment of RBS’s behavior during the financial crisis.”
Andrew Tyrie, chairman of the U.K.’s Treasury Committee, said he would ask the FCA to “get on with publication as soon as possible” and request a publication date, according to remarks released by his office. A spokesman for Prime Minister Theresa May said the accusations in the BBC and BuzzFeed reports were “very serious,” but that “it is right that the Financial Conduct Authority investigates the claims thoroughly” before the government makes any further comment.
RBS said the leaked e-mail about project “Dash for Cash” was from a banker who didn’t work in its Global Restructuring Group and related to restructuring loans, not moving businesses into GRG. The language used was “ill-judged” and is not condoned by the bank, RBS said.
“Following extensive reviews and investigations, we have not seen any evidence that companies were targeted inappropriately for transfer to GRG,” the bank said in a statement. “All companies entering GRG were in some form of financial distress.”
RBS required a 45.5 billion-pound ($56 billion) bailout from British taxpayers to avert failure during the financial crisis, as commercial and real estate lending soured while it recorded deep losses at its investment bank. The bank has since offloaded assets worth more than 1 trillion pounds as it shrinks from a global titan to focus on domestic consumer and business lending.
“We have seen nothing to support the allegations that the bank artificially distressed otherwise viable SME businesses or deliberately caused them to fail,” RBS Chief Conduct and Regulatory Affairs Officer Jon Pain said in the statement. “In the aftermath of the financial crisis we did not always meet our own high standards and we let some of our SME customers down.”
RBS’s former Deputy Chief Executive Officer Chris Sullivan, who now runs commercial lending operations at Banco Santander SA’s U.K. unit, was criticized by legislators for “willfully obtuse” evidence given to Parliament in 2014 relating to its GRG. While RBS later that year apologized for “any confusion” in the evidence, it reiterated that GRG didn’t boost profits at the expense of clients.
The FCA said last week it received the final report on RBS’s treatment of small firms from consulting firm Promontory Financial Group LLC and the accounting firm Mazars, which it had asked to review the bank’s treatment of business customers. There are now a “number of steps for the FCA to complete before we are in a position to share our final findings,” the watchdog said in a statement.