RBS referred to City watchdog by Vince Cable
TAXPAYER-backed bank RBS has been referred to the Financial Conduct Authority (FCA) by the business secretary Vince Cable over claims in a report out today from Lawrence Tomlinson, enterprise adviser to the Department for Business.
Tomlinson claims RBS has forced good businesses into difficulties purely to strip their assets and gain more profit for the bank.
But RBS denied it is wrongly forcing customers into difficulty to strip them of assets and turn a bigger profit.
“The Global Restructuring Group successfully turns around most of the businesses it works with, but in all cases is working with customers at a time of significant stress in their lives. Not all businesses that encounter serious financial trouble can be saved,” RBS said in a statement.
“We are already committed to an inquiry to investigate how customers are treated by RBS when facing financial difficulties and ensure that we provide them with appropriate support.”
Tomlinson also recommends RBS and Lloyds should be split up into six retail and commercial lenders and have their investment banking arms sold off. The report said the UK banking sector remains too concentrated. “Privatising RBS and Lloyds in their current form would be a return to the banking landscape of 2003, possibly with even less competition.”
“There are strong arguments for splitting the government-backed banks into six solely retail and commercial banks from RBS and Lloyds, each with about 10 per cent market share.”
The remainder, including equity and investment businesses should be sold and the proceeds used to recapitalise the six new banks, he said.
The report also recommends that lenders should in large part be owned by staff and retail investors.
However this is thought to be unlikely to happen. Lloyds is already being sold off by the government at a profit relative to its bailout price.
And the government this month decided against splitting RBS into a good bank and a bad bank.