RBS was already facing pressure over its turnaround business’s operations following a report by former Bank of England official Sir Andrew Large, who recommended last month that the lender look into claims by some smaller businesses that GRG had acted against their best interests to make more profit.
An analysis of West Register accounts highlights the expansion in the size and profitability of RBS’s restructuring division since the financial crisis. One subsidiary, West Register Investments, has grown in size from £21.8m in 2008 to £110m at the end of last year, while its profits have increased from £10m to £52m over the same period.
The property restructuring group’s largest individual unit by assets is West Register Property Investments, which has seen its assets expand from just under £19m in 2008 to £579m in 2012.
Separate accounts are not available for GRG, which is run as a profit centre by RBS.
Chuka Umunna, shadow business secretary, said he was concerned that a bank 81pc owned by the state was operating a division meant to help stricken customers as a source of profit.
“If RBS’ business turnaround division, the Global Restructuring Group, is being used principally as a profit centre as opposed to an operation to help businesses and prevent loss, that rings alarm bells and sends the wrong message,” he said. “It would paint a picture of otherwise viable businesses being fleeced for fees and profit, instead of being given the support they need.”
Andrew Tyrie, chairman of the Treasury Committee, said the reports revealed “a fundamental cultural problem with RBS’s lending to and treatment of SMEs”.
Businesses that have dealt with GRG staff have complained they have been required to pay hundreds of thousands of pounds to RBS in penalty fees, as well as being forced to pay out large sums of money for reports by outside consultants.
Yes, I can imagine bankers ripping off companies in this manner. Wouldn’t surprise me in the least. Capitalism red in tooth and claw and all that.
However, I also wouldn’t take a rise in the balance sheet of the part of a bank that dealt with stricken property firms as evidence of their doing so. We have just been through something of a property crash, have we not? What would we expect to be happening with the part of a bank that deals with distressed property at such a time?
Quite, in the aftermath of a property crash we would expect that part of a bank that deals with dud property to be rather busy. So I don’t take this limited evidence as being evidence that everyone’s being ripped off. Still open to someone proving it but this ain’t it.