A report into the SME lending practices of RBS has said the bank has “failed” to meet expectations.
The report, commissioned by the bank itself, said that its lending to SMEs has fallen disproportionally in the wake of the financial crisis.
RBS discouraged a disproportionate amount of businesses from making formal applications and its staff were risk averse, the report said.
It also noted a negative perception from SMEs of how they are treated by RBS, particularly for businesses in financial distress.
Sir Andrew Large, author of the report, said: “RBS deserves credit for the way it has tackled some of the shortcomings in its SME business during a period when the group was battling for survival. The bank has also invested heavily to lay the foundations for sustainable growth.
“However, there is much that still needs to be done. 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.”
Ross McEwan, RBS CEO, said the bank would take immediate action in response to the report.
He said: “The picture Sir Andrew Large paints is not an entirely comfortable one, but it’s one we have to confront. A successful, vibrant, and well-regarded SME bank is central to the overall value and reputation of this company.
“We must ensure our policies, processes and systems help our people do the best job they can for customers and shareholders in this area. Our aim is to become the number one bank for SME customer service in the UK and to grow our lending along the way.
The bank plans to write to thousands of SMEs to highlight its willingness to lend and work to ensure its staff are capable of dealing with applications quickly and correctly.
Lawrence Tomlinson, entrepreneur in residence at the department for business, said it was important that reforms were made to boost SME confidence.
Tomlinson, who has made headlines criticising banks’ treatment of SMEs in the past, said: “I met Andrew Large in the course of his review to express my grave concerns about RBS’s treatment of businesses and the fear this causes amongst the business community towards accessing finance.
“I am therefore very pleased that he has recognised these concerns, and is recommending an inquiry into the serious accusations that have been made, along with much stronger safeguards going forward to ensure that customers receive appropriate treatment.”
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