Previous testimony untrue
RBS boss McEwan admits: ‘I was wrong’ on GRG
Ross McEwan: ‘We did not do a good job with the customers’
Royal Bank of Scotland chief executive Ross McEwan today admitted he was wrong when he told MPs the bank’s controversial global restructuring group (GRG) had turned around the “vast majority” of businesses.
Speaking to the Treasury Select Committee, Mr McEwan said “it was not true”, adding that some of the businesses previously described as turned around had in fact entered insolvency.
Addressing MPs on allegations that the GRG group employed unethical business practices as the banking crisis loomed, he confessed: “We did not do a good job with the customers.
“At the time when they were in most need of help this organisation in many, many cases, in far too many cases, was not there giving them the help they needed.”
One MP told Mr McEwan: “Don’t for a minute tell anyone you are not aggressive. It is just offensive.”
GRG is accused of deliberately charging high fees to struggling businesses to maximise the bank’s return.
One internal memo from 2009 which was published only recently told staff they needed to give companies “rope” with which they could “”hang themselves”.
“They are the stuff of which nightmares are made as far as a chairman or a chief executive are concerned,” Sir Howard said. “It’s absolutely awful.”
He said: “We are encouraged that over the last couple of years our small business lending has begun to grow again.
“There was a period when RBS contracted in this market. Evidence now suggests small business lending is growing and our small business lending is once again on an upward trend.
“So we don’t think, at the moment, that there is a straightforward read across to a systemic bad relationship between the bank and its small business customers.”
Committee member and Labour MP John Mann accused some RBS executives of “misleading Parliament.”
Tony Boorman, managing director of the Promontory Financial Group, who was commissioned to carry out a review of GRG’s practices, told MPs: “The defensive position of RBS did not help us make good progress through this inquiry.”
Whistleblower and author of the Tomlinson Report, Lawrence Tomlinson, commented: “Based on RBS’ denials to date, it is not surprising that Ross McEwan forgot RBS’ fourth business principle: “Do the right thing”.
“Perhaps the irony is not lost on Ross McEwan and Sir Howard Davies that very much like the despicable advice given on how to treat customers in their “Just Hit Budget” document, RBS has given itself the rope to hang itself with.
“After years of denial, avoidance and aggressive response to victims, today’s embarrassing dressing down by the Treasury Select Committee should finally prompt RBS to take responsibility for the damage this bank has done to not just its customers, but the whole business-banking relationship.
“If Ross and Sir Howard are sincere in their desire to rebuild trust and “do the right thing” then they will reflect on today’s evidence and agree to lift the gagging orders from settlement cases and ex-employees so we can finally see the full truth.
“Then again, maybe the culture in RBS has changed little since GRG’s heyday and RBS remains, too big to fail, too big to regulate and too big to manage.
“Promontory’s Managing Director was crystal clear on his view of the systematic and institutional nature of GRG’s mistreatment of SMEs. Having raised concerns about the treatment of businesses by RBS GRG back in 2013, I am pleased that Promontory has done such a thorough job and upheld that Sir Andrew Large and I were right to raise concerns about possible systematic failures in RBS’ turnaround division.
“All I have ever wanted to achieve was a thorough investigation of these issues and accountability for any misdeeds found. The former has now been confirmed and so the next part is most important: who was responsible, what did they know and was it intentional? Then it will be time to hold those responsible accountable.
“Parliament has clearly got behind this issue. Alongside the pursuit by the Treasury Select Committee, the recent debate in the Commons shows that MPs from all political parties are completely in support of more substantive action to hold the bank to account and achieve justice for individuals affected.”
The FCA investigation was instigated by allegations contained in a report by Lawrence Tomlinson who raised concerns about RBS’ treatment of SMEs in GRG in 2013. At the time, Dr Tomlinson was Entrepreneur in Residence at the Department for Business and his report was passed to the regulator by the Secretary of State for further investigation.
In significant areas, Promontory found there to have been “systematic and institutional” inappropriate treatment of business in RBS GRG. Examples of the majority of bad practice identified in the Tomlinson Report were upheld by Promontory. RBS has, to date, continued to deny this.