Belfast Telegraph

Mark Carney left 'shocked' over new allegations to hit RBS

BY JOHN-PAUL FORD ROJAS

Allegations that small businesses were driven to collapse by the Ulster Bank parent Royal Bank of Scotland were "deeply troubling" and ought to be pursued "to the fullest extent of the law", Bank of England governor Mark Carney has said.

Mr Carney said the Financial Conduct Authority had been informed but agreed that it was "shocking" that the allegations had not been picked up earlier.

A report by Business Secretary Vince Cable's adviser Lawrence Tomlinson alleges RBS drove firms to collapse in order to buy back their assets at rock bottom prices.

Mr Carney told MPs on the Treasury Select Committee that the claims were "deeply troubling and extremely serious", adding: "It is the direct responsibility of the FCA to conduct an appropriate investigation.

"This has to be tracked down to the fullest extent of the law."

In a combative session, Mr Carney also mounted a robust defence of forward guidance – accusing its critics of a "failure of logic" – and said he was offended by suggestions that he was too close to Chancellor George Osborne.

During the wide-ranging hearing, he also pledged that increasing the number of women running the Bank of England would be a central priority.

On RBS, Mr Carney dismissed the idea that "predatory restructuring" of businesses could be a consequence of rules obliging banks to increase the ratio of capital they hold, saying: "This behaviour is a fundamental violation of the banking relationship."

Mr Carney was also challenged during the session over the Bank's flagship forward guidance policywhich pledges that policy-makers will not consider raising rates above 0.5% before unemployment falls to 7%, but uncertainty over when that is likely to happen has drawn criticism.

Mr Carney said that without forward guidance, in the current environment of strong economic growth, and job creation, markets would have been assuming an immediate rate hike now.

Instead, because of the guidance, that was "not the conversation", he said.

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