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RBS small business lending in need of ‘overhaul’, says report



A report into the Royal Bank of Scotland’s (RBS) lending operations has said that the part state-owned bank has failed its small and medium sized enterprise (SME) customers.

The report, which was commissioned by RBS chairman Sir Philip Hampton, said that the perception has arisen among SMEs that RBS is “unwilling to lend”.

Like all major financial institutions, RBS was engulfed by the 2008 financial crisis, and as such, the report says that although lending had to decrease, the contraction in lending has “overshot” and the bank had not lent as much as it should have.

Sir Andrew Large, who led the investigation, said, “RBS deserves credit for the way it has tackled some of the shortcomings in its SME business during a period when the group was battling for survival.

“However, there is much that still needs to be done. The bank has failed to meet its own SME lending targets, partly because they were unrealistic and also because of weaknesses in its lending operations.”

The report was welcomed by RBS CEO Ross McEwan, who said the bank must “confront” the issues.

“We must ensure our policies, processes and systems help our people do the best job they can for customers and shareholders in this area”, he added.

Our aim is to become the number one bank for SME customer service in the UK and to grow our lending along the way.”

In August, there were also concerns of mistreatment of business customers after a government advisor delivered a dossier to business secretary Vince Cable giving evidence of bad practices, labelled by one ex-banker as “cruel [and] inhumane”.

Lawrence Tomlinson, who delivered the dossier to Cable, also welcomed the report into lending operations.

He said, “I met Sir Andrew Large in the course of his review to express my grave concerns about RBS’s treatment of businesses and the fear this causes amongst the business community towards accessing finance.”

“I am therefore very pleased that [he] has recognised these concerns, and is recommending an inquiry into the serious accusations that have been made, along with much stronger safeguards going forward to ensure that customers receive appropriate treatment.”

 Further reading:

Millionaire entrepreneur calls for ‘growth over greed’ in banking

‘We need a radical shake-up of the banking system’

‘Shocking and widespread malpractice’ should land bankers in jail, says commission

Majority of Britons want to see guidelines to end irresponsible banking

The Guide to Sustainable Banking 2012


Millionaire entrepreneur calls for ‘growth over greed’ in banking