RBS Appoints Clifford Chance Law Firm to Probe its Lending Practices
Royal Bank of Scotland Group Plc (RBS) chose a law firm, Clifford Chance LLP, to investigate whether the banking company tried to boost its profits by pushing companies that owed it money into financial difficulties. RBS took the action today after a report by Lawrence Tomlinson, chairman and founder of LNT Group Ltd., said that once companies were in default, the bank could charge them advisory fees and buy their assets at reduced prices. As a resutlt RBS has been referred to Britain’s Financial Conduct Authority. U.K. banks, including 81 percent taxpayer-owned RBS, have been criticized by the government for denying loans to businesses since the 2008 financial crisis as they boost capital reserves and enhance their balance sheets. The Bank of England earlier this year extended its plan to provide cheap loans to companies and consumers and make credit available for small firms to help support the economy. “There are many devastating stories of how RBS has wrecked good businesses and the ruinous impact this has on the lives of the business owners,” Tomlinson said in an e-mailed statement. RBS shares rose 0.4 percent to 331.50 pence in London today but only has gained 2.2 percent this year, making it the second-worst performer among Britain’s five largest banks.