Just 6 per cent of loans renegotiated by Royal Bank of Scotland’s Global Restructuring Group were returned to performing portfolios at the business, according to the bank’s annual report.
The information is buried on page 174 of the 543-page document. It also reveals that the unit, accused by the government adviser Lawrence Tomlinson of forcing viable businesses into distress to make money for the bank, renegotiated £14.5bn of loans during 2011 and 2012.
The Tomlinson report has been passed on to City watchdogs by the Business Secretary, Vince Cable, while Royal Bank has hired the City law firm Clifford Chance to assess the claims. A report by Sir Andrew Large, commissioned by the bank, was also critical of its treatment of small businesses, saying it turned away too many at an early stage.
Yesterday in a statement RBS said: “In the boom years leading up to the financial crisis, the over-heated property development market became a major threat to the UK economy. RBS did more than its fair share to fuel this, and commercial property lending was one of the key drivers of our near collapse as valuations rapidly plummeted.
“Facing up to these mistakes has been a difficult, but essential, part of making RBS a safe and strong bank once again. That has been one of GRG’s main tasks. GRG successfully turns around most of the businesses it works with, but in all cases it is working with customers at a time of significant stress in their lives. Not all businesses that encounter serious financial trouble can be saved.
“We are already committed to an inquiry to investigate how customers are treated by RBS when facing financial difficulties and ensure that we provide them with appropriate support.”
But last night Andrew Tyrie, who chairs the Treasury Select Committee, said: “The reports published today make clear that there is a fundamental cultural problem with RBS’s lending to and treatment of SMEs. This is unwelcome but not wholly surprising. It confirms what my parliamentary colleagues and I have been hearing for a number of years. The actions and reputation of RBS have discouraged would-be customers and reduced SME activity. We have all lost out.”
Matthew Oakeshott, the former Liberal Democrat Treasury spokesman who resigned over the Treasury’s Project Merlin deal with the banks to boost lending to small firms in 2011, said the report was “two and a half years too late”.
“We all knew … Project Merlin was a con, but the Treasury couldn’t or wouldn’t see through Stephen Hester’s evasions on RBS’s lack of appetite for SME lending. Britain’s small businesses don’t need another inquiry – they need our government-backed RBS and Funding for Lending Scheme to focus on real jobs, not forcing up house prices ever further beyond the realms of affordability”.