Royal Bank of Scotland is closing its hugely controversial Global Restructuring Group, with its boss leaving less than three weeks after he was accused of being “wilfully obtuse” in evidence to a parliamentary committee.
GRG, the division of the state-owned bank that dealt with corporate customers in financial difficulties, has been mired in controversy since government adviser Lawrence Tomlinson penned a sharply critical report accusing the unit of forcing viable businesses to the wall in order to make a profit for the bank.
A review by the City law firm Clifford Chance said it had found no evidence of that, but it did highlight a series of failings and a regulatory investigation is continuing.
Derek Sach, the chief of the division, is now leaving, just weeks after being lambasted by the Treasury Select Committee. It also emerged that Aubrey Adams would depart on the same date. He had responsibility for West Register, the RBS property company that also came under fire in Mr Tomlinson’s report.
Mr Tomlinson said: “After the evidence I have received from businesses, and the truly upsetting circumstances many have found themselves in, I can only welcome today’s news about GRG. It is a bold but significant move by the bank, which should start the important process of rebuilding ... trust with the business community. The disbandment of GRG in its current form is a vital step towards creating a fairer banking system that treats its customers well.”
However, Andrew Tyrie, chairman of the Treasury committee, said: “The important issue here is whether RBS is now – and is seen to be – acting in the long-term interests of its shareholders and [small business] customers. This suggests that RBS still has a long way to go.”
Neil Mitchell, the former boss of IT firm Torex Retail, who is aiming to sue RBS over GRG, said: ”I find the timing of his [Mr Sachs’] exit intriguing given the recent statement made by Andrew Tyrie ... concerning his obtuse behaviour when appearing before the parliamentary committee and that the investigation by the Financial Conduct Authority into the treatment of business customers by GRG is not yet concluded. I feel that this now puts the spotlight on the RBS chairman and CEO.”
RBS declined to comment on the departures or on whether they will receive pay-offs, although their official leaving date of 31 March suggests a long period of paid gardening leave.
Laura Barlow, who joined the bank in 2009, will now head restructuring and will be charged with implementing changes, some of which were called for in the Clifford Chance review and in a report commissioned by the bank on its handling of small business customers.
Silence from the bank on GRG is golden
Ask yourself this: as the wave of criticism of GRG threatened to swamp Royal Bank of Scotland, why wasn’t the man who dominated it for more than two decades at least suspended?
The answer is that Derek Sach knows where the bodies are buried. One of banking’s great survivors, he is that rare thing, a holdover from Fred Goodwin’s era.
Having been accused of being “wilfully obtuse” before a parliamentary committee, the bank’s hand was in effect forced and so Mr Sach is going. But what of a pay-off? It is in RBS’s interests that Mr Sach goes quietly and stays quiet.
Its “no comment” tells its own story.Reuse content