RBS 'failed to lend' to businesses

rbs RBS said it will act on the recommendations

A damning review on the lending practices of the Royal Bank of Scotland (RBS) has found widespread failure.

The report, by Sir Andrew Large, a former deputy governor of the Bank of England, said it had failed to lend to small and medium-sized businesses.

He said that many of its customers thought it was a bank which was "unwilling to lend".

His report has been accepted in full by RBS, which has promised to treat its customers better in future.

The victims of the bank's poor lending policies were small and medium sized enterprises (SMEs).

"The bank has failed to meet its own SME lending targets, partly because they were unrealistic and also because of weaknesses in its lending operations," said Sir Andrew.

He also ordered the bank to set up an enquiry into the way it had handled businesses facing difficulties and distress.

He said RBS needed to show more sensitivity towards such customers.

Customers

The chancellor, George Osborne, described the report as "pretty shocking".

"RBS was a lousy lender to small businesses," he told the BBC.

According to Sir Andrew's report, RBS's total lending to small businesses fell from £55bn in 2009, to £38bn now.

He described its lending processes as "rather slow and complex".

He said RBS gave out business loans to one in every four customers that asked for them, a lower rate than some of its rivals.

Start Quote

The picture Sir Andrew Large paints is not a comfortable one, but it's one we have to confront.”

End Quote Ross McEwan Chief executive, RBS

He blamed the extent to which it "screens out" customer enquiries when they apply.

Amongst nine recommendations, Sir Andrew Large suggested RBS set up a coherent set of objectives in its lending policies.

He said there should be an enquiry into the allegations of poor treatment of distressed borrowers.

And he said the bank should improve its communications with customers.

Expansion

In response, RBS said it would take a series of immediate actions, to improve its support for SMEs.

"The picture Sir Andrew Large paints is not a comfortable one, but it's one we have to confront," said Ross McEwan, the chief executive of RBS.

He has launched a review of the bank, to improve its performance.

It will write to thousands of businesses, explaining how much more the bank will lend them.

It will cut the time it takes to get a loan approved.

And it will aim to be the leading lender to small businesses, as judged by the Federation of Small Businesses (FSB) and the British Chambers of Commerce (BCC).

"The Large Review shows that there is significantly more we can do to expand our lending to small and medium-sized businesses," he said.

"What you get today from RBS is an absolute commitment that it is going to be the best small business lender in Britain," the chancellor, George Osborne, told the BBC.

More on This Story

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

BBC Business Live

  1.  
    MARKETS UPDATE 09:09:

    European shares have opened lower. The FTSE 100 is down 15 at 6,815. Frankfurt's Dax is 64 lower at 9,505 and Paris's Cac 40 is down 17 at 4,378. London shares are lower after key mining companies' shares fell in response to a fall in the price of iron ore in China. The pound is not much changed at $1.6585 and at 1 euro 25.56.

     
  2.  
    RUSSIAN HACKING? 08:50:

    Our World Service colleagues are reporting that the FBI is investigating reports that Russian-backed hackers are suspected of launching a co-ordinated attack on American banks' computer networks. The FBI says it is trying to find out whether the attack on JP Morgan, one of the biggest US banks, along with four other financial institutions, was in retaliation for sanctions against Russia. The hacking is reported to have involved the theft of sensitive customer data.

     
  3.  
    PADDY POWER 08:29:
    David Moyes statue outside Anfield

    The betting business says it has experienced a record 35% rise in the number of new customers at 795,000 more punters. It says it has done this without increasing spending on marketing. Spending on stunts, however, included these: "We put an 'In case of emergency break glass' encased Alex Ferguson wax model outside Old Trafford... and erected a giant bronze statue of Moyes for services rendered - outside Anfield before the Liverpool versus Chelsea showdown."

     
  4.  
    AEROFLOT RESULTS 08:18:
    Aeroflot

    More airline news. Russia's state-controlled Aeroflot reports a loss of 1.9bn roubles (£35m) for the first half of 2014. That compares to a 45m rouble profit a year ago. The slowdown in the economy and a fall in the value of the rouble against other world currencies are among the reasons.

     
  5.  
    QANTAS 08:03:
    Kangaroo

    Shares in the Flying Kangaroo are up 7.3% at A$139 in the wake of its hefty loss. "We are focused now in the short to medium term on the transformation program," said chief executive Alan Joyce. "We are not actively out there looking for an airline investor." Investors are actively buying its shares though - a new law is opening the doors to foreign investment in the international arm of the airline.

     
  6.  
    AA RESIGNATIONS 07:48:
    AA logo

    There seems to be some upheaval at the top of the AA. Its chief executive Chris Jansen is resigning immediately. The chief financial officer Andy Boland is leaving too.

     
  7.  
    ICE SALES 07:39: Radio 5 live
    Alex Brown of Exeter Chiefs takes part in the Ice Bucket Challenge

    The charity ice bucket challenge appears to be boosting the sale of ice cubes. Tesco says they're up 20%. Paul Doughty, managing director of The Ice Company told Wake up to Money his firm had been busy restocking supermarkets - which saw big sales last weekend. But he explained that this was a bit of a challenge. "At this time of year, we are actually ramping down production, sales get run down over the summer, and we start to reduce our staffing levels in our factories through August."

     
  8.  
    LIVING WAGE 07:31:

    What is is? It is set at £8.80 an hour for London and £7.65 for the rest of the UK. Find out here. The minimum wage - the government's base line, is £6.31.

     
  9.  
    PADDY POWER 07:26:
    Paddy Power pic from website

    Betting giant Paddy Power says pre-tax profits are down 13% at £62m for the first half of the year. The company says many football punters had "dream weekends" in January and March, with 16 and then 17 teams of the 21 most backed winning. "This proved costlier than John Cleese's divorce", says Paddy.

     
  10.  
    HAYS RESULTS 07:16:

    Profits have risen at the recruitment business Hays, which operates in 33 countries. Profits rose 12% in the past year to £132m. Dividends are up 5%. "In many of our global markets, the vast majority of professional and skilled recruitment is still done in-house, with minimal outsourcing to recruitment agencies which presents substantial long-term structural growth opportunities," the company said.

     
  11.  
    LIVING WAGE 07:05: BBC Radio 4

    On the TUC Living Wage story: TUC general secretary Frances O'Grady tells Today that women come off worse because there is low value attached to the jobs women tend to do, such as care working and shop work.

     
  12.  
    LIVING WAGE 06:53: BBC Radio 4
    Care worker

    Today is discussing the Living Wage concept. In many parts of Britain, women working part-time earn less than the Living Wage, says the TUC. Three quarters of part-time women workers in Lancashire do, as do two thirds of part-time women workers in West Somerset. TUC chief Frances O'Grady explains: "The minimum wage is an absolute floor, the Living Wage is the level that means you can take your children on holiday for a week - nothing fancy." The minimum wage is £6.31.

     
  13.  
    QANTAS 06:42:

    Can Qantas solve its huge financial problems? The BBC's Phil Mercer in Sydney says: "The airline's annual accounts have become a horror story of decline as it tries to chart a path back to profit and sustainability". Read more.

     
  14.  
    MALAYSIA AIRLINES 06:32: BBC Radio 4

    Can an airline survive two major plane disasters in a single year? Today says that's the question for Malaysia Airlines. Those who have flown on the airline recently report near empty cabins. Can Malaysian Airlines survive? David Learmount from Flightglobal thinks so. "Malaysia will be given a chance by the government and it will be given some money. People don't like seeing airlines go bust," he told Today listeners.

     
  15.  
    BUSINESS LENDING 06:22: Radio 5 live

    Wake Up to Money looks forward to later this morning when the Bank of England will give us an update on its Funding for Lending scheme - introduced two years ago to encourage banks to lend to small businesses. It's not been a rip-roaring success: a previous report said, despite all that help, the amount of money being lent was down £2.7bn over the first three months of this year.

     
  16.  
    QANTAS 06:12:
    A Qantas Airline plane gets takes off at Sydney Airport in Sydney on August 28, 2014

    Overnight Australia's national airline Qantas reported a huge loss of A$2.8bn for the past year - its biggest ever. That was partly due to writing down the value of its planes by A$2.6bn. Qantas added weak domestic demand, poor consumer spending and rising fuel costs also contributed. Chief executive Alan Joyce tried to put some gloss on the figures: "There is no doubt today's numbers are confronting... but they represent the year that is past".

     
  17.  
    SCOTTISH INDEPENDENCE 06:03:
    Saltire

    Pro-independence business people in Scotland have hit back. 200 of them have signed a letter, appearing in the Herald online, saying that the business case for independence "has been made - and it's strong and ambitious". They add: "The real threat to Scotland is the real possibility of a British exit from the European common market".

     
  18.  
    Rebecca Marston Business reporter, BBC News

    The monitor has been fitted and off we go. You can plug in to us bizlive@bbc.co.uk or @bbcbusiness. Here until 13:00.

     
  19.  
    06:00: Ian Pollock Business reporter, BBC News

    Good morning, the Business Live page will have its finger on the business pulse, just for you.

     

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.