We need your help now

Support from readers like you keeps The Journal open.

You are visiting us because we have something you value. Independent, unbiased news that tells the truth. Advertising revenue goes some way to support our mission, but this year it has not been enough.

If you've seen value in our reporting, please contribute what you can, so we can continue to produce accurate and meaningful journalism. For everyone who needs it.

Johnny Green/PA Wire/Press Association Images

Ulster Bank parent company 'forced small firms to default'

A report by the British government has alleged that Royal Bank of Scotland hit healthy businesses with charges and rates that forced them to close allowing bank to seize their assets at a lower price.

ROYAL BANK OF Scotland, the parent company of Ulster Bank, faces more damage to its reputation after the British government handed regulators a report claiming that the state-rescued lender forced small firms to default.

Compiled over the past six months, it focuses on claims against the bank’s Global Restructuring Group (GRG), which deals with risky loans.

The report alleges that the bank hit seemingly healthy businesses with unmanageable charges and rates before it seized their assets at a knock-down price.

Reacting to the report’s findings, Royal Bank of Scotland insisted that “GRG successfully turns around most of the businesses it works with” but said that “not all businesses that encounter serious financial trouble can be saved”.

It added 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.”

Business Secretary Vince Cable handed the report, written by Lawrence Tomlinson from the Department for Business, Innovation and Skills, to the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).

The report’s author noted: “From the cases I have heard, it is clear that a perception has arisen that the intention is to purposefully distress businesses to put them in GRG and subsequently take their assets… at a discounted price.”

“There are many devastating stories of how RBS has wrecked good businesses and the ruinous impact this has on the lives of the business owners,” it said.

Cable called the allegations “very serious”.

“I am however confident that the new management of RBS is aware of this history and is determined to turn RBS into a bank that will support the growth of small and medium sized businesses,” he added.

RBS is 81 per cent owned by the British state following its near collapse during the 2008 financial crisis.

It recently announced plans to create an internal ‘bad bank’ to run down €46 billion of high-risk assets as the government looks to return the rescued lender to the private sector.

Ulster Bank reported over €1.2 billion in losses last year and has been beset by a series of problems in recent months including IT failures and under-collection errors.

- additional reporting Hugh O’Connell

- © AFP, 2013

Read: Ulster Bank assets to be transferred to RBS ‘bad bank’

Read: Ulster Bank says its customer deposits are up 12 per cent since IT meltdown

Your Voice
Readers Comments
    Submit a report
    Please help us understand how this comment violates our community guidelines.
    Thank you for the feedback
    Your feedback has been sent to our team for review.