The former Government advisor who published a scathing report on the way RBS managed its relationships with some small businesses has welcomed the bank’s admission that its corporate turnaround division was used as “profit centre”.
Yorkshire entrepreneur Lawrence Tomlinson made headlines last year when he claimed that RBS had engineered businesses into default to move them into its Global Restructuring Group (GRG). Yesterday he said he was “pleased the truth has come to light”.
The GRG unit is meant to help RBS’s corporate clients who find themselves in financial distress to return to health.
RBS’s deputy chief executive Chris Sullivan and GRG head Derek Sach told the Treasury Select Committee that the division was not used as a “profit centre” when they gave evidence in June, contradicting the findings of a report by former Bank of England Deputy Governor Andrew Large.
However, in a letter to committee chairman Andrew Tyrie published on Tuesday, Sullivan said RBS now accepted Large’s description. “With regard to the term of ‘profit centre’ we wish to make clear we do not disagree with the way that that accounting term was used by Andrew Large in his report,” he said.
Tyrie said RBS had made a “belated U-turn”, having initially branded the description as “totally inappropriate”. “It now appears that RBS has been wilfully obtuse with the committee,” he said.
Mr Tomlinson said: “I’m pleased the truth has come to light on this issue and the bank has clarified that GRG is a profit-centre for RBS after all. Andrew Tyrie and the Treasury Select Committee are undertaking a very important inquiry into SME Banking so it is vital they are provided with accurate information to aid their process.”
Tyrie said he would be writing to RBS chairman Philip Hampton and the committee would report on the matter after the summer.
An independent review found no evidence the bank had set out to defraud customers but the unit is still being investigated by the financial regulator.