RBS share price: Bank briefs lawyers to review treatment of ailing SMEs

on Nov 26, 2013
Updated: Oct 21, 2019

iNVEZZ.com, Tuesday, November 26: Royal Bank of Scotland (LON:RBS) has appointed City law-firm Clifford Chance to examine allegations that the bailed-out bank had deliberately wrecked ailing small businesses to make a profit.

The claims, which focus on an RBS unit styled the Global Restructuring Group (GRG), are made in a report initiated and written by Lawrence Tomlinson, an entrepreneur who recently became an adviser to Business Secretary Vince Cable.
Trade these shares now through Hargreaves Lansdown from £5.95 per deal.
Tomlinson said yesterday that there was evidence that the bank deliberately put some “good and viable” businesses into default so it could make more profit (RBS share price: Bank accused of exploiting ailing companies). Cable has passed his advisory report to banking regulators, the Financial Conduct Authority and the Prudential Regulation Authority.

Are you looking for signals & alerts from pro-traders? Sign-up to Invezz Signals™ for FREE. Takes 2 mins.

A separate inquiry, one initiated by RBS itself and conducted by Sir Andrew Large, deputy governor of the Bank of England, yesterday criticised the opaque management structures and poor controls in the GRG. The report looked into the bank’s lending to small businesses and said that RBS must tackle some “serious allegations.” Referring to the as yet unproven allegations, the Large report says: “Internal structures at RBS are not well suited to mitigating the risk of poor perceptions arising for the whole bank as a result of the experiences of distressed customers.”

**Criminal investigation to be launched?**
The RBS chief executive Ross McEwan said in a letter to Large yesterday: “To ensure our customers can have full confidence in our commitment to them, I have asked Clifford Chance to conduct an inquiry into this matter, reporting back to me in the new year.” The prominent legal firm will look into both reports, whose findings were described as “shocking” by Chancellor George Osborne yesterday.

For his part, Vince Cable demanded an urgent response from Britain’s financial regulators and from RBS. Asked on BBC Radio if a criminal investigation should be launched, he responded: “That’s for the regulators and the police to establish, whether there is a case. The authorities need to establish whether there is something worse than unethical behaviour actually going on here”.

According to Large, the FCA was almost certain to take action in relation to the accusations if substantiated, adding the bank had taken the findings of his inquiry “very seriously”. The regulator has so far declined to comment.

**RBS share price edges higher**
Despite the controversial news, RBS shares traded higher yesterday, closing the London session at 332.74p, 0.38 percent up on the day. The stock added a further 0.18 percent at the opening bell this morning. According to AnalystRatingsNetwork data, RBS currently has a ‘hold’ rating and a consensus price target of 330.86p.
**As of 08:01 UTC, buy RBS shares at 331.40p.**
**As of 08:01 UTC, buy RBS shares at 331.00p.**
Trade stocks with Hargreaves Lansdown from £5.95 per deal.
Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.
Fill out my Wufoo form!


Want easy-to-follow crypto, forex & stock trading signals? Make trading simple by copying our team of pro-traders. Consistent results. Sign-up today at Invezz Signals.

Learn more
Finance & Banking Stock Market