Royal Bank of Scotland’s Global Restructuring Group (GRG) has been accused of deliberately causing customers’ businesses to fail despite claiming to be turning their businesses around.
A special investigation by BBC Newsnight and BuzzFeed News has now revealed internal RBS documents which allege that the purpose of GRG was a ‘profit centre’, with one senior executive even referring to RBS’ activities as “Project ‘dash for cash’”.
The leaked documents claim to reveal that RBS staff were receiving higher bonuses for finding firms to ‘restructure’ through GRG. Once discovered, the bank would cut the size of customer’s loans and apply higher interest rates, which would pressurise them to sell their assets. RBS was then able to buy up the assets cheaply from the ailing businesses.
Customers have claimed that they were “provoked into default” of their loans through unrealistically low valuations. For one customer interviewed by the BBC, the result of RBS’ activities was the loss of his business, his home and his marriage.
GRG was responsible for overseeing small business clients that had fallen into financial difficulty. More than 12,000 companies were pushed into the ‘turnaround’ division of GRG in the wake of the 2008 financial crash. RBS are denying any wrongdoing, claiming that the purpose of GRG is to turn around viable businesses if they can. However, the leaked documents apparently show that GRG’s Finance Director said that the purpose of GRG was debt recoverability, rather than returning businesses to financial health.
After it was recently reported that RBS was forced to pay £846m to a US regulator for its role in the 2008 banking crisis, these allegations have led to suggestions that this could very well be the next banking scandal.
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