Allegations damage RBS, says chief
Royal Bank of Scotland chief executive Ross McEwan has denied that the state-backed lender made a "systematic" effort to profit from customers in financial distress as he set out details of a review into the allegations.
Mr McEwan said the bank was co-operating with regulators at the Financial Conduct Authority to set up the probe though he said it had received no evidence to support such a claim - but that it had done "serious damage" to RBS's reputation.
The review, to be carried out by law firm Clifford Chance, will report by January 31 - with findings on specific allegations as well as broader issues such as the banking culture.
RBS, which is 80% owned by the taxpayer, said it would co-operate with any investigation by the FCA or the Bank of England's Prudential Regulatory Authority.
The announcement came a day after Bank of England governor Mark Carney told MPs the allegations were "deeply troubling and extremely serious" and ought to be pursued "to the fullest extent of the law".
A report by Business Secretary Vince Cable's adviser Lawrence Tomlinson earlier this week claimed that RBS drove firms to collapse to buy back their assets at rock-bottom prices.
Mr Carney said such "predatory restructuring" would be a "fundamental violation of the banking relationship".
Setting out details of the review into the claims, Mr McEwan said there had been "serious allegations" about the way it dealt with customers who were in financial difficulty and that they would be fully investigated.
He added: "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.
"We do not believe that this is the case, but it has nonetheless done serious damage to RBS's reputation. No evidence has been provided for that allegation to the bank. The review will investigate the claim fully and I will report back on its findings.
"It is vital that we enjoy the trust of our customers and I cannot allow these allegations to undermine that trust."
Mr Tomlinson's report focused on the bank's Global Restructuring Group (GRG), which handles loans classed as risky and is understood to have power to scrap loan deals, impose inflated interest rates and charge hefty penalties.
But the report alleged that firms not necessarily in immediate financial distress are "engineered" into GRG, sometimes through small technical breaches of loan terms, such as late filing of minor financial information.
They are then hit with exorbitant rates and fees, which in some cases cause them to collapse, allowing RBS to buy their property and assets on the cheap for the benefit of its West Register property arm, according to Mr Tomlinson.
The bank said the Clifford Chance review would look at the key findings of the report and review policies and practices within RBS through interviews and analysis.
It would advise RBS "on whether the allegations appear to have substance" and make recommendations about any steps it must take as a result.
The review is to be carried out on an independent basis, the bank said, led by a regulatory partner within the firm. It will be overseen by Jon Pain, RBS group head of conduct and regulatory affairs.
The bank said: "RBS continues to work closely with the Financial Conduct Authority on the establishment of this review. The bank will share all findings with the FCA."