1st Nov 2013 12:28
LONDON (Alliance News) - Royal Bank of Scotland Group PLC has been criticised for not lending enough money to small and medium enterprises, with an independent review finding that just 25% of firms that approach RBS end up borrowing from the bank.
The independent review, chaired by former Bank of England Deputy Governor Andrew Large, undertaken by management consultancy firm Oliver Wyman and commissioned by RBS, found a number of shortcomings in the bank's approach to SME lending.
"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," Andrew Large said in a statement.
Since the financial crisis, overall bank lending to SMEs has declined by nearly 25%, which has been attacked by politicians who hope economic growth will be stimulated by a thriving SME sector.
RBS has been criticised by some firms for being unwilling to lend or even withdrawing support from existing clients since it ran into trouble during the financial crisis, before which it had an "aggressive" lending approach.
The report found that RBS?s lending volumes to SMEs have fallen faster than peers and its market share has contracted from an unsustainably high share in 2008, to a level more consistent with its customer base.
"We have taken a number of steps to change and improve the way we do business but the Large review will show that there is significantly more we can do to expand our lending to small and medium-sized businesses. More recently, some of our competitors have managed to increase their lending in this area while we continue to contract," RBS Chief Executive Ross McEwan said in a statement, Friday, before the review was published.
RBS shares were Friday quoted at 347.80 pence, down 5.4%, making it the second biggest faller on the FTSE100.
By Samuel Agini; [email protected]; @samuelagini
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