RBS accused of forcing small firms to default
London (AFP) - Royal Bank of Scotland faced more damage to its reputation on Monday after the government handed regulators a report claiming that the state-rescued lender forced small firms to default.
Compiled over the past six months, it focuses on claims against the bank's Global Restructuring Group (GRG), which deals with risky loans.
The report alleges that the bank hit seemingly healthy businesses with unmanageable charges and rates before it seized their assets at a knock-down price.
Reacting to the report's findings, Royal Bank of Scotland insisted that "GRG successfully turns around most of the businesses it works with" but said that "not all businesses that encounter serious financial trouble can be saved".
It added in a statement: "We are already committed to an inquiry to investigate how customers are treated by RBS when facing financial difficulties and ensure that we provide them with appropriate support."
Business Secretary Vince Cable handed the report, written by Lawrence Tomlinson from the Department for Business, Innovation and Skills, to the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
The report's author noted: "From the cases I have heard, it is clear that a perception has arisen that the intention is to purposefully distress businesses to put them in GRG and subsequently take their assets... at a discounted price."
"There are many devastating stories of how RBS has wrecked good businesses and the ruinous impact this has on the lives of the business owners," it said.
Cable called the allegations "very serious".
"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," he added.
RBS -- 81 percent owned by the state following its near collapse during the 2008 financial crisis -- recently announced plans to create an internal 'bad bank' to run down £38 billion ($62 billion, 46 billion euros) of high-risk assets as the government looks to return the rescued lender to the private sector.
