OUTLOOK: RBS sending SMEs to the wall? Surely this can’t pass without a break-up

Forget Libor. Forget mis-sold swaps. Forget PPI. If the allegations about RBS made by Lawrence Tomlinson yesterday are true, surely this is the scandal the state-owned bank should not be allowed to survive in its current form.

The claim that RBS and, to a lesser extent, Lloyds deliberately and systematically pushed small and medium-sized companies to the brink so they could seize their assets on the cheap are surely so damaging as to be potentially terminal. Especially as this is behaviour taking place right here, right now.

Such cynical manipulation is what one expects from vulture funds, those Gordon Gekkos who seize control of companies on the cheap before selling their assets for a handsome profit. That is why such funds exist, and where they earn their name.

High street banks, however, operating as they do with implicit state guarantees, have an altogether different duty of care. Particularly when they’re owned by the taxpayer.

The picture Mr Tomlinson paints, particularly of RBS, is of a vertically integrated, systematically organised asset stripping machine: a value destruction factory where the bank’s managers, lawyers, external accountants, all push in the same direction – to bring client businesses to their knees so as to seize control and offload for a handsome return.

Solid evidence of this “profiteering” (his word) is hard to find in RBS’s accounts. The main alleged culprit, its distressed property division known as West Register, is not even named in the bank’s official financials, while the bank’s overall Global Restructuring Group (GRG) “turnaround” division, does not report profits or losses either.

However, the little detail we can elicit from the official Stock Exchange filings suggests that happy endings for the businesses who fall into GRG’s maw are few and far between. To quote from RBS’s most recent set of accounts: “Of the loans renegotiated by the GRG during 2011 and 2012 (£14.5bn), 6 per cent had been returned to satisfactory by 31 December 2012.”

Six recoveries out of 100: the field hospitals of the Crimea did better.

Such a low recovery rate comes as little surprise when you consider RBS was levying such huge charges and costs on companies it had put into the GRG “turnaround” process. As one victim reported, GRG bled it of £256,000 in fees alone.

And, to add the ultimate insult to us taxpayers’ injury, Mr Tomlinson claims the banks are actively directing businesses in their recovery wards not to pay their taxes.

All the focus so far has been on the behaviour of the distressed debt divisions, but the general behaviour regarding the way banks offer such standard services as overdrafts, even to financially healthy customers, seems strikingly abusive. Ever more security and personal guarantees are required in return for ever smaller overdrafts. The effect? To either drive SMEs to the wall or force them to shrink their businesses dramatically. Overdrafts to SMEs have fallen 16 per cent – or £3bn – in the past year alone due to such practices.

As an anonymous whistleblower at one unnamed bank told Mr Tomlinson’s researchers, the ethos was to “lend as little as you have to … to make sure you got as much out of the customer’s wallet as possible.” That quote will chime with the experience of many bank customers, in both retail and business banking. Santander has started charging £1 a day just for retail current account customers to use their authorised overdraft. Banks still charge £20 a time for letters notifying account holders of minor infringements. Complaints are routinely dealt with badly, and with seemingly unfair results for customers.

Mr Tomlinson’s allegations are all still to be investigated. The names of the accusers have been redacted, their testimony as yet untried. But there is enough in the report to justify tenfold his core conclusion: that RBS and Lloyds. with 60 per cent of the SME market, are now bigger than too-big-to-fail. They are too big to regulate. Too big to serve. And too big to be allowed to survive in their current form. We must break them up or rue the consequences.

Cranswick’s foresight is the sort of high culture we need

The good people of Hull are rightly proud of their forthcoming status as city of culture. But they have another reason to boast, for that celebrated pearl of the East Riding can claim to be the home of one of this country’s most impressive food businesses: Cranswick.

You may never have heard of Cranswick, but if you’re partial to a rasher of good quality air-dried bacon, or like a herby, organic sausage, chances are you’ve eaten one of theirs. We should celebrate this business because it has grown strongly by spotting, decades before most rivals, that Brits would move increasingly to better quality food, grown in Britain. This year, thanks to the horsemeat scandal, the long-term strategy has born fruit like never before. Sales and profits have leaped, and shareholders will get a juicy dividend with their gammon joint this Christmas.

But like the best of relishes, the Shergarburger affair has been sweet and sour for Cranswick: while more people are buying its UK-pork bangers, the buy-British effect pushed up domestic pig prices to record highs, hitting its profit margins. Currently, UK piggies sell for £1.72 a kg compared with £1.35 for their continental cousins. The chief executive and Cranswick lifer Adam Crouch is philosophical, though.

Our pig farmers have for years been squeezed ’til their trotters squeaked by high feed costs and cheap European imports, he says. With a decent season of strong pricing behind them, and evidence of long term demand from a provenance-aware public, perhaps our farmers will be emboldened to expand and end the pitiful situation where we rely on imports for half of our porkie needs.

Even grumpy old Philip Larkin would have raised a rasher to that.