The expert behind a recently released report has hit out at the Royal Bank of Scotland (RBS) for failing small and medium businesses with its lending practices.
The study, put together by former Deputy Governor of the Bank of England Andrew Large, suggested that many firms saw RBS as an unwilling lender. A number of these have chosen to use facilities like invoice factoring as a result.
In the report, Large said:
“The bank has failed to meet its own SME lending targets, partly because they were unrealistic and also because of weaknesses in its lending operations.”
Responding to the report, which he classed as shocking, the Chancellor of the Exchequer, George Osborne, said:
“RBS was a lousy lender to small businesses.”
In another damning review, Large went on to suggest that RBS sets up an inquiry into its dealings with firms which are in difficulty. He cited a lack of sensitivity in such cases.
The fall in SME lending has seen RBS’s funding drop from 2009’s level of £55 billion to just £38 billion. This has been fuelled by the bank lending to just one in four of customers requesting finance.
The report lays out a total of nine recommendations to change the lending culture at the banks, including the creation of a clear set of lending objectives and improving customer communications.
All findings in the report have been accepted by RBS, with chief executive Ross McEwan saying that at his order, an immediate review into the bank had been launched.