Page 22 - RBS GRG F Teaching Note

GRG & Businesses in Distress

Banks tend to categorise their problems as legacy issues

thereby endowing them with a cloak of historic fog that

implies a perception of ‘not on our watch’.

However, RBS’ GRG’s treatment of small and medium sized

businesses somewhat failed to show that any change in

attitude and culture post financial crisis had developed.

Denial by senior management of wrongdoing was very

evident e.g. RBS CEO Ross McEwan blamed his underlings

for GRG’s mistreatment of small businesses, suggesting the

unit’s senior executives, not boardroom leaders, were at

fault while appearing before the Treasury Select Committee.

Following the 2008 credit crisis, GRG took control of 16,000

distressed SME customers with £65 billion of assets. But,
GRG took advantage of these struggling businesses to

secretly boost RBS’ profits. Under threat of foreclosure of
loans, the banks seized control of customer assets cheaply

claiming they were failing even though often they had not

defaulted on any loan repayments.

Perhaps most despicable was that bank managers were able

to increase their bonuses by identifying business customers

who could be squeezed in the so called “Project: Dash for

Cash”.