RBS’ restructuring division deliberately caused small businesses to default to improve the bank’s balance sheet, according to an investigation by The Times.
The article, which was published on Tuesday, alleges the bank’s Global Restructuring Group (GRG) “piles on fees, revalues property that loans are secured against, triggers defaults and takes over assets” causing businesses to fail.
Risk weighted assets require banks to hold capital against loans. The capital required for small and medium-sized businesses are higher because of the risks involved, and this provided an incentive for banks to reduce exposure, according to The Times.
The newspaper claims the bank implemented a strategy to accelerate the disposal of these assets to improve its capital base and boost performance in stress tests, which was “agreed with Treasury” in 2009.
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