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Published: Thu, October 13, 2016
Economy | By Melissa Porter

RBS defends bank against allegations it squeezed struggling businesses

RBS defends bank against allegations it squeezed struggling businesses

Royal Bank of Scotland has admitted for the first time that it "let customers down" by mistreating them in its restructuring division. Confidential files suggest bank staff could also pocket bigger bonuses by pinpointing firms for a restructure.

The firm was commissioned by RBS to produce an independent report on the allegations.

Around 16,000 businesses were reportedly put into GRG after the financial crisis, with loans issued by the unit increasing 500 per cent to £65 billion between 2007 and 2012.

Jon Pain, RBS' chief conduct and regulatory affairs officer, said: " RBS has been very clear that GRG's role was to protect the bank's position, where possible by working with distressed businesses to return them to financial health. "I will be writing to the FCA for a publication date", Andrew Tyrie, chairman of parliament's Treasury Select Committee, said in a statement.

The documents showed that two years prior, GRG was said to be "a major contributor to the bank's bottom line", generating £1.2bn in 2011.

RBS, which owns Ulster Bank here, said it had let down some small business customers and that it should have done better in some areas, but said investigations had no shown any wrongdoing on its part.

In the report, Clifford Chance denied Tomlinson's accusation that West Register was deliberately targeting clients' assets.

The GRG witnessed a 400% increase in customers following the crisis.

"In regard to the wider allegations raised, we have found no evidence that the bank either inappropriately targeted such businesses to transfer them to GRG or drove them to insolvency", he added.

Royal Bank of Scotland has said there was no evidence it had deliberately caused SMEs to fail, while a senior British lawmaker called for the United Kingdom regulator to fix a publication date for a long-delayed review into the allegations.

"RBS is already potentially facing a multi-billion dollar fine in the U.S. for mis-selling in the run up to the credit crunch".

"The basis of what has come out so far, this appears to be a shocking story, with many businesses at the wrong end of it".

RBS' share price dipped at the opening bell this morning, having lost 0.95 percent to 176.90p as of 08:03 BST.

RBS's former Deputy Chief Executive Officer Chris Sullivan, who now runs commercial lending operations at Banco Santander's United Kingdom unit, was criticized by legislators for "willfully obtuse" evidence given to Parliament in 2014 relating to its Global Restructuring Group.

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