Calls for claim to be settled

SME campaign group blasts ‘outrageous’ funding to CYBG

David Duffy

David Duffy: ‘great opportunity’


A campaign group fighting allegations of fraud against Clydesdale bank says it is “outrageous” that the bank will be receiving a subsidy to take on new SME customers before addressing the claim against it.

CYBG, parent of Clydesdale and Yorkshire, will be one of eleven challenger banks granted a share of the £275m Incentivised Switching Scheme (ISS) which forms part of the £775 million Royal Bank of Scotland State Aid Alternative Remedies Package.

The ISS is managed by Banking Competition Remedies as an alternative to RBS selling its Williams & Glynn subsidiary which was a condition for receiving state aid in 2008.

It will provide up to £275m to SME customers of that part of RBS’s business that would have formed Williams & Glynn. They will be encouraged to switch their business current accounts and loans to ‘challenger’ institutions. A further maximum sum of £75m has been set aside within RBS to cover certain customers’ switching costs.

David Duffy, CYBG CEO said: “We’re pleased Yorkshire Bank and Clydesdale Bank will be participating in the Incentivised Switching Scheme.

“We’ve invested £12m in preparing for the switching scheme so we can offer a smooth transition for Williams & Glyn customers leaving RBS, and we now have a great opportunity to offer an exciting new home for thousands of Williams & Glyn customers when the scheme opens next February.

“SMEs will be at the heart of the UK’s future economic growth and it is vital there is a vibrant and competitive banking market helping SMEs realise their future growth plans.”

However, RGL and allSquare are demanding that before receiving any of this money CYBG first settles its claim. They are bringing a group action on behalf of SMEs who they allege were damaged or destroyed by tailored business loans (TBL) sold by Clydesdale Bank between 2001 and 2012.

The claim is based on allegations of fraud. The TBLs were marketed as fixed rate loans but RGL says they contained embedded or hidden swaps which were not disclosed to customers and locked them in with crippling break costs.

On 15 October, Clydesdale Bank acquired Virgin Money and has faced repeated questions from MPs and the public as to the sale of TBLs. The bank did not allocate any specific provision to the group action when it announced its end of year results on 20 November.

RGL is currently in pre-action correspondence and expects to bring legal proceedings in the first half of 2019, once all claimants have been processed.

James Hayward, CEO of RGL said: “The scale of damage caused across the country and in key business sectors by Clydesdale’s behaviour is truly shocking.

“It is outrageous that Clydesdale will receive millions of pounds to take on new SME customers, while they still have not addressed the thousands of SMEs destroyed by TBLs. We are confident in our claim against the bank and will be initiating proceedings in 2019.”

Daniel Hall, Managing Director of allSquare said: “We support healthy competition in the banking industry, but the Banking Remedies Commission should make it a condition of payment that Clydesdale Bank first cleans up its legacy issues of toxic business loans.

“It is disgraceful that Clydesdale continues to ignore the pain and distress that its TBLs have caused SME customers nationwide. Anybody who believes they may be eligible to join the action, are encouraged to contact us as soon as possible and before legal proceedings commence.”

RGL has released new data revealing the sectors most affected by the TBLs sold by Clydesdale Bank and its parent company at the time, National Australia Bank.

The sectors accounting for the highest number of claims include: property investment (45.3%), hotel catering (12.6), farming (8.9%) and construction (7.9%).

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