In the wake of a report in November 2013 by Lawrence Tomlinson, an adviser to the UK government's department for Business Innovations and Skills, the bank has decided to disband the group, sources say. The report said RBS’s GRG unit regularly forced business customers to default on loans so that the bank could charge higher fees, or in some cases seize their properties and sell them
Though it stopped short of saying RBS systematically defrauded customers, the report set off a political row over the bank's treatment of small businesses. RBS commissioned law firm Clifford Chance to investigate the allegations, and the Financial Conduct Authority (FCA) is conducting its own inquiry into the matter.
GRC head Derek Sach will leave the bank next year along with Aubrey Adams, head of property for the division. Laura Barlow has now been appointed to head up RBS’s restructuring activities. Her team will work alongside the group's existing businesses to help clients who are struggling with repayments. Some of the assets that are currently being restructured are being moved to the bank's internal 'bad bank' created in 2013 to sell its worst-performing assets.
Following the financial crisis the number of customers being referred to RBS's GRG unit rose. The GRG unit operated as a standalone business, employing several hundred people across the world. A report on its business lending, commissioned by the bank, found that fewer than ten percent of businesses referred to the GRG unit ended up in bankruptcy. But its author, former Bank of England Deputy Governor Andrew Large, said there is a potential conflict of interest at GRG because it selects the struggling businesses it works with from RBS’s larger base of customers, and aims to generate a profit.
