Royal Bank of Scotland 'drove firms to the wall so it could gobble up their assets’
ROYAL Bank of Scotland drove small firms out of business to buy up their assets at rock-bottom prices, a report claims today.
Government adviser Lawrence Tomlinson says he has a dossier of evidence proving the bank forced companies to default on payments so it could seize their property.
The tycoon’s report has been passed to the Financial Conduct Authority and the Prudential Regulation Authority by Business Secretary Vince Cable.
Mr Cable also passed it to former deputy Bank of England governor Sir Andrew Large, who is publishing a review of RBS lending to small firms today. Mr Tomlinson’s report focuses on the turnaround division at RBS, Global Restructuring Group.
It deals with risky loans and can also scrap loan deals, impose higher interest rates and charge hefty penalties.
The report accuses RBS of referring firms to GRG for technical breaches of loan terms, such as filing minor financial details late.
They are then charged fees running into hundreds of thousands of pounds, the report claims, putting many out of business and allowing RBS to buy their assets on the cheap for its West Register property arm, Mr Tomlinson said.
One business said it had forked out £256,000 in fees alone. Another said RBS made it pay £40,000 to continue existing borrowing terms.
Mr Tomlinson said: “A perception has arisen that the intention is to purposefully distress businesses to put them in GRG and take their assets for the West Register at a discounted price.”
RBS said it was “already committed” to an inquiry, following recommendations made by Sir Andrew.