TROUBLED bank RBS is facing fresh scrutiny over its treatment of small businesses, after contradictory evidence emerged yesterday on whether or not it made a profit from working with struggling firms.
The bank had been accused of making money out of distressed businesses, with some firms accusing the bank of forcing them to go bust so it could take control of their assets.
An investigation by ex-Bank of England policymaker Sir Andrew Large argued that the Global Restructur-ing Group (GRG) is a profit centre, creating incentives for staff to make money from firms, rather than turn their fortunes around.
But yesterday the GRG’s boss Derek Sach ar-gued that the unit was loss-making, as the fees it charged firms did not cover its losses.
“Over the five-year period in question, the SME area lost £2.1bn for the bank,” he told the Treasury Select Committee of MPs.
Committee chairman Andrew Tyrie demanded more information from Sir Andrew on whether or not the unit was indeed loss-making.
“RBS has flatly contradicted an important conclusion, and concern, of Sir Andrew’s report,” he said. “I will be writing to Sir Andrew for his view.”
Sir Andrew’s probe and that of Clifford Chance found that the bank had not forced firms to the wall to boost profits.
Meanwhile, proxy voting group Pirc yesterday advised shareholders to vote against RBS’s remuneration policy at its upcoming annual general meeting. It argued that the bank’s offer of shares to executives to avoid the EU’s bonus cap could make their pay packages excessive, especially when compared with that of the average worker at the company.