Royal Bank of Scotland has been forced to issue a grovelling apology for “incorrect” evidence given by two of its senior employees at a parliamentary committee hearing earlier this year.
In yet another blow to the majority state-owned bank’s reputation, the Treasury Select Committee has released a letter from Sir Philip Hampton in which the RBS chairman admits that it was “not correct” for Chris Sullivan and Derek Sach to insist in June that the bank’s Global Restructuring Group (GRG) was not being run as a “profit centre”.
The GRG, which is being wound down, has been accused of driving viable small firms into default so that RBS could boost profits.
Sir Andrew Large, in an independent review of RBS’s small lending operations in 2013, described the GRG as an “internal profit centre”. But in June Mr Sullivan, the bank’s deputy chief executive, told MPs that GRG is “absolutely not a profit centre”, and Mr Sach, who ran the GRG, said Sir Andrew had got it wrong in his report when he described the unit in such terms.
Sir Philip’s letter, which was sent in August, agrees that Sir Andrew’s definition was “reasonable and correct”, adding “that is the answer the committee should have received and I am sorry that they did not”.
Andrew Tyrie, chairman of the Treasury Select Committee, welcomed the apology. “Anybody can make a simple mistake in their evidence. But this was more than that – it was materially incorrect on a crucial point and unacceptable,” he said.
In his letter Sir Philip says Mr Sach and Mr Sullivan were guilty of an “honest mistake” and did not intend to mislead the committee.
Mr Sach is leaving the bank, and The Independent understands that no disciplinary action will be taken against Mr Sullivan.
The committee has also released a letter from a West Midlands firm which suggests that Mr Sach misrepresented how happy the company was with its treatment by the GRG when he gave evidence to MPs.
RBS appointed the law firm Clifford Chance to review allegations that the bank had in effect asset-stripped distressed small business customers. The report found no evidence to support the allegations, but it was criticised as insufficiently thorough and lacking in independence.
An investigation by the Financial Conduct Authority into the claims continues. It is expected to report early next year.
Last week RBS revealed that it made errors in data submitted to a stress test of its reserves, overstating the size of its safety buffer. It was also fined £56m by the Financial Conduct Authority for IT failings in 2012 which left customers unable to make payments. chairman next year.
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