A review of RBS’ Global Restructuring Group (GRG) by law firm Clifford Chance has cleared the division of allegations that it needlessly put small firms into financial distress in order to profit from their insolvencies.
The report, published on 17 April, concluded there was no evidence to back up the claims made about the bank by businessman Lawrence Tomlinson.
In his November 2013 report, Tomlinson claimed by moving its business customers into GRG, RBS had generated revenue through fees, increased margins and ensured the purchase of devalued assets by its property division, West Register.
RBS refuted the suggestions and hired law firm Clifford Chance to carry out an independent investigation of the practises of the Global Restructuring Group.
“The bank has no financial incentive to unnecessarily bring about the customer’s insolvency by imposing unaffordable interest and fees. We found no examples where the bank deliberately charged interest and fees which it believed or knew that the customer could not afford,” said Clifford Chance.
The report found that between 2008 and 2013, more than 2,800 SMEs in financial distress had been turned around and returned to the mainstream bank.
Clifford Chance also reported that the property division West Register often paid a higher price than the next highest bidder for properties sold off by GRG.
In a statement, RBS CEO Ross McEwan said that trust between a bank and its customers is “fundamental”.
McEwan said: “That trust was put at risk at RBS by the allegation of systematic abuse made in the Tomlinson report. I welcome the Clifford Chance findings which show no evidence of the serious and damaging allegation that we had to set out deliberately defraud our business customers.”
“Following the reckless lending that led up to the financial crisis, the bank’s shareholders and customers lost billions of pounds on bad loans. The bank, through its restructuring team, helped minimise those losses where it could, successfully turning round thousands of businesses, safeguarding hundreds of thousands of jobs. This required the bank to make incredibly difficult decisions, but our first priority then and now is to try and help our customers recover.”