Leaked Docs Show RBS Pushed Small Businesses Towards Closure
Documents leaked to the media have revealed that British bank, the Royal Bank of Scotland (RBS) actively adopted predatory practices to squeeze more profits from struggling businesses.
Internal emails leaked to Buzzfeed and the BBC refer to a project called ‘Project Dash for Cash’ which promised higher bonuses for those executives who managed to extract more revenue from firms that were not doing well. Staff members were urged to increase loan payments and bank fees for such clients and later clamp down on them if they were unable to payback their loans on time. They were also instructed to seize their assets for cheap if loan payments were delayed.
BBC Newsnight
The department in question was RBS’ specialist department called the Global Restructuring Group (GRG), who was tasked with the responsibility of focusing on companies who were performing poorly and then helping them reverse the trend. Around 12,000 companies were handled by GRG in the aftermath of the 2008 financial crises. It is now alleged that the division worked to destroy these firms in order to increase its own profits rather than helping them survive the crisis.
The latest revelations back the claims made by Lawrence Tomlinson in 2013, the ex-government business adviser who alleged that the bank killed off small businesses by putting pressure on them and selling their assets for profit.
Several RBS customers have earlier accused the bank of amending the borrowing limits after valuing their businesses unrealistically. This often resulted in them violating lending thresholds which led to RBS transferring the companies to its GRG division which used pushy measures on the companies like taking equity stakes, levying higher interest rates and pressing for sale of assets to pay off loans.
The leaked documents reveal that GRG made a profit of £1.2 billion in 2011. Former GRG executives Chris Sullivan and Derek Sach had earlier denied that the division was a profit center and had rejected the claims made by Tomlinson. Defending itself, RBS highlighted two reports that had investigated the allegations made by Tomlinson and cleared the bank of acting deliberately to make small companies default on loans.
The bank has however acknowledged that it did not do right by some of its customers. In a statement, RBS said,
RBS has been very clear that GRG’s role was to protect the bank’s position … 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. Since that time, RBS has become a different bank and significant structural and cultural changes have been put in place, including how we deal with customers in financial distress.
Related Articles
Thyssenkrupp turns bearish as union resists restructuring
Last month, Tata Steel, a $100 billion business conglomerate based out of India, stated that it is still in talks
Weak Pound Likely To Cause British Businesses To Raise Prices
A recent survey shows that Britons will have to facing rising prices in the coming months as the economy comes
IMF Warning of “China Toxic Shocks”
With economies all over the world finally getting back on track after years of austerity, The International Monetary Fund (IMF)
