RBS facing investigation into asset-grab scam
Royal Bank of Scotland is facing investigation by City watchdogs over claims it drove small businesses to the wall in order to seize their assets for profit.
Business Secretary Vince Cable confirmed yesterday he had referred RBS to the Financial Conduct Authority and Prudential Regulation Authority over the explosive accusations.
In a report to be released today government adviser Lawrence Tomlinson says he has uncovered a dossier of evidence alleging that RBS drove firms to collapse so it could buy back their assets at rock-bottom prices.
Mr Tomlinson's report focuses on the Global Restructuring Group (GRG) at the 81 per cent taxpayer-owned bank.
The GRG handles loans classed as risky and is understood to have the power to scrap loan deals, impose inflated interest rates and charge hefty penalties.
The report alleges that firms not necessarily in immediate financial distress are "engineered" into GRG, sometimes through small technical breaches of loan terms, such as late filing of minor financial information.
They are then hit with exorbitant rates and fees - sometimes running to hundreds of thousands of pounds - which can cause them to collapse.
That allows RBS to buy their assets on the cheap for the benefit of its West Register property arm, according to Mr Tomlinson.
He said he was calling for "immediate action to stop this unscrupulous treatment."
His report found a "disproportionately high" number of complaints against RBS but also found examples of similar practices at other banks.
Mr Cable said: "Some of these allegations are very serious and I am waiting for an urgent response as to what actions have been taken.
"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."
RBS said it was already committed to an inquiry on how it treats small firms.
A spokesman said: "GRG successfully turns around most of the businesses it works with. Not all businesses that encounter serious financial trouble can be saved."
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