ROYAL Bank of Scotland’s new boss has pledged a raft of actions to boost its support for smaller businesses after an independent report out today claims the bank has failed to meet the expectations of its customers.
Ross McEwan said he fully accepted the sometimes “uncomfortable” findings of City grandee, Sir Andrew Large, who was commissioned by the bank last July amid mounting criticism of RBS’s performance for small and medium-sized companies (SMEs).
It comes as a separate Treasury-commissioned independent report is set to recommend today that RBS’s toxic loans be ringfenced in an internal “bad bank”. It expects this to free up an internal “good bank” to boost lending to businesses.
In response to today’s Large report, RBS promises to write to thousands more businesses telling them how much more the bank is willing to lend. It also plans to sharply cut the time that SME loan applications take and work on a new survey with business groups such as the Federation of Small Businesses to judge how well the bank serves the sector.
McEwan, who replaced Stephen Hester as chief executive last month, also unveils RBS’s third-quarter trading results this morning. He is set to claim the bank’s acceptance of Large’s criticisms and response shows its determination to confront its failings in SME lending.
The report says RBS has already made a number of “critical changes” to its SME business since the onset of the financial crisis. However, the report, also involving management consultants Oliver Wyman, also concludes the bank “has not supported the SME sector in a way that meets its own targets or the expectations of its customers”. It says that, while RBS has “started to address a number of the issues raised, further progress is needed”.
McEwan said: “The picture Sir Andrew Large paints is not an entirely comfortable one, but it’s one we have to confront. A successful, vibrant, and well-regarded SME bank is central to the overall value and reputation of this company.”
He added that the review “shows 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. We will address all the issues this report raises”.
RBS said today that in future it will aim for “all but the most complex lending decisions to be made in just five days of receipt of all necessary information”. The process, it admitted, can currently take weeks or months.
The bank will set up a dedicated website to show what information it uses to make an SME lending decision.
RBS said it will aim for two thirds of its lending decisions to be made locally and by sector specialists. And it aims to target at least 90 per cent of its relationship managers and credit managers being professionally qualified by end–2014.
Colin Borland, a spokesman for the Scottish Federation of Small Businesses, said: “This report looks a positive step in RBS proactively asking its customers what they need from the bank. It does not look like a whitewash.
“McEwan’s comments and promised actions suggest it is being taken seriously. It looks like he is accepting RBS has to do better.”