RBS is acting like a “vampire,” sucking the cash out of troubled firms as soon as it becomes available, Lawrence Tomlinson told MPs this afternoon.
Tomlinson caused a storm last year when he published a report into the treatment of small firms by the bank, arguing it took businesses with strong balance sheets and squeezed them hard, ultimately taking their assets and making money for the bank.
He gathered the evidence from 200 firms at the time and more than 1000 since, in his role as the Department of Business, Innovation and Skills’ entrepreneur in residence.
He met MPs to give more details on the claims that RBS’s Global Restructuring Group (GRG) is engineering firms into financial distress.
“When your business was moved into the GRG by whatever fashion, you were given perhaps a doubling of the bank’s interest rate margin and lots and lots of fees,” Tomlinson told the Treasury Select Committee.
“The business becomes strangled. It is frustrating to hear talk on ‘zombie firms’. I liken them more to a vampire business – they are kept in the GRG and as soon as they get any cash to invest and grow, it is taken out of them. I have seen firms face charges and fees that are set exactly at the amount that the firms have made.”
"The most serious allegation that has been made is that RBS conducted a 'systematic' effort to profit on the back of our customers when they were in financial distress," said an RBS spokesperson.
"We do not believe that this is the case and no evidence has been provided for that allegation to the bank."
The bank has commissioned law firm Clifford Chance to look into the claims, and the Financial Conduct Authority is also investigating.