RBS accused of bullying firms for £1bn in fees

Rivals claim Stephen Hester's bank is barging into rights issues using its strength in corporate lending

Square Mile bankers have accused Royal Bank of Scotland of hardball tactics in its efforts to scoop a lucrative share of more than £1bn worth of fees made by City banks during the recent wave of rights issues.

Rival bankers are crying foul over the way RBS has supposedly "muscled its way" into many of the biggest capital raisings of the year grabbing large chunks of underwriting fees on issues such as Land Securities, HSBC and GKN.

Usually, underwriting spoils are largely enjoyed by banks that act as corporate brokers to companies. But analysis of 31 rights issues made by London-listed firms this year where more than £35bn of capital was raised, shows that RBS managed to earn fat underwriting fees on 12 occasions despite not acting as corporate broker to any of the companies in question.

Rivals have accused RBS of using its relative strength in debt and corporate lending markets to force companies to allow it to take part in the money spinning underwriting process. "RBS is acting very aggressively in trying to get a piece of the action at the moment," said one disgruntled banker. "The pressure it is heaping on companies to which it has lent money is considerable."

A number of City institutions are considering sending letters of complaint to the regulator on the issue. Another bank said: "To me, and many others, it simply seems anti-competitive. It's unfair."

A spokesman for RBS declined to comment but sources close to the bank said it was acting fairly in its attempts to win business.

"In these market conditions, everyone wants to make sure that a rights issue is properly supported. It's been well publicised recently that corporates are looking beyond their own corporate brokers and traditional investment banks to get rights issues done in difficult market conditions. If these companies are restructuring debt and raising equity at the same time, then it makes sense."

Concerns about RBS using its state-backed power in the City comes weeks after the Stephen Hester-led bank submitted plans to the European Commission on how to scale back parts of its business – an effort to avoid the imposition of punitive measures from Brussels in the future. The European Competition Commissioner, Neelie Kroes, has warned that RBS and Lloyds Banking Group, which received billions in state aid, would likely have to sell off big chunks of their businesses in the coming years. The EU said last week that the pair has just five years to lose state aid or be wound down.

Competition concerns were waived by the Government when it bailed out the banks last year. The rescues have left the banks with significant positions of power in segments of the market. Earlier in the year, Mr Hester revealed plans to sell off "non core" assets worth £240bn including some of its Asian operations. He is grappling with a mammoth £2 trillion balance sheet left by his predecessor, the disgraced Sir Fred Goodwin.

Start your day with The Independent, sign up for daily news emails
Sport
England's women celebrate after their 3rd place play-off win against Germany
Women's World CupFara Williams converts penalty to secure victory and bronze medals
Arts and Entertainment
Ricardo by Edward Sutcliffe, 2014
artPortraits of LA cricketers from notorious suburb go on display
News
newsHillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'