The Serious Fraud Office is considering a criminal investigation into allegations that the Royal Bank of Scotland systematically defrauded companies by forcing them out of business, amid growing pressure over the bank’s treatment of small and medium-sized enterprises.
In recent weeks the SFO has conducted interviews with former executives of UK businesses affected by RBS’s Global Restructuring Group, which manages the bank’s riskier loans, according to five people familiar with the matter.
The agency is assessing whether there was any criminal activity or whether the bank was engaging in lawful, if bad, business practice, the people said.
The probe was in its early stages and had not progressed to a full investigation, the people added.
RBS has begun its own investigation into its treatment of SMEs following a report published on Monday by Lawrence Tomlinson, “entrepreneur-in-residence” at the Department of Business Innovation and Skills. Critics of the Tomlinson report have argued it relies heavily on anecdotal evidence.
Mr Tomlinson alleged RBS had been “unnecessarily engineering a default” to move businesses out of the hands of branches and into RBS’s turnround divisions, helping it generate revenue by imposing punitive fees and higher interest rates, and by seizing assets at devalued prices.
The SFO is examining some of these allegations as well as another file of potential cases compiled by Neil Mitchell, a businessman and former chief executive of Torex Retail.
The move could put further pressure on Sir Philip Hampton, the bank’s chairman, who was informed about the allegations by Mr Mitchell at the group’s annual meeting 18 months ago. Mr Mitchell also met Sir Philip in September last year to discuss the allegations.
The SFO’s interest is separate from regulatory inquiries by the Prudential Regulatory Authority and Financial Conduct Authority, to whom Vince Cable, business secretary, has referred the Tomlinson report. Ultimate SFO sanctions include charging individuals or a corporate conviction.
RBS said it was not aware of any SFO investigation.
Hundreds of corporate customers have alleged that RBS instigated sudden changes in the valuation of their property, that they were put out of business by defaults which were “manufactured”, or that they were mis-sold interest rate swaps.
One businessman, Tony Sykes, this year told former RBS chief executive Stephen Hester that the bank had “butchered” his business.
Mr Sykes dubbed the bank’s GRG unit a “hit squad” after his relationship manager handed over control of his group’s accounts to the restructuring arm.