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RBS: Large review attacks small firms lending

RBS is gearing itself up for a fresh fusillade as Sir Andrew Large is expected to issue a damning report. Picture: Getty Images

RBS is gearing itself up for a fresh fusillade as Sir Andrew Large is expected to issue a damning report. Picture: Getty Images

  • by MARTIN FLANAGAN
 

ROYAL Bank of Scotland is facing fresh criticism as former Bank of England deputy governor Sir Andrew Large prepares to deliver a damning report on its lending to small firms.

His review is likely to recommend the state-backed bank offers a wider range of products to business customers and may be published alongside third-quarter figures tomorrow.

There is also speculation that Chancellor George Osborne will deliver his decision on whether to split it into a “good” and “bad” bank.

Today RBS was forced to reassure clients about foreign exchange rates they were offered, after disclosing earlier this month that it was co-operating with an investigation by Britain’s Financial Conduct Authority (FCA).

Barclays has also been drawn into the global investigation of alleged rigging of currency trading, it revealed today.

UBS and Deutsche Bank said they too were co-operating with the cross-border regulatory inquiries into alleged manipulation of the £3.3 trillion-a-day forex market.

Benchmark foreign exchange rates, often referred to as fixes, are a cornerstone of global financial markets, used to price trillions of dollars worth of investments and deals and relied upon by companies, investors and central banks.

Barclays, unveiling a 26 per cent slide in third-quarter underlying pre-tax profits to £1.38 billion from £1.9bn, said it was reviewing its forex trading covering several years to last August.

Profits at its BarCap investment bank halved to £463 million from £988m in the three months to end-September. Lower activity in fixed income and currencies was partly driven by uncertainty about when the US Federal Reserve would start scaling back its asset purchase programme that is pumping billions of dollars into the American economy.

Barclays said in its latest results statement: “Various regulatory and enforcement authorities have indicated they are investigating foreign exchange trading, including possible attempts to manipulate certain benchmark currency rates or engage in other activities that would benefit their trading positions. The investigations appear to involve multiple market participants in various countries.”

Antony Jenkins, who took over as chief executive of Barclays 14 months ago, said later: “From time to time these legacy issues will arise and will have to be dealt with. We are changing the culture of Barclays. I’ve said it will take five to ten years to deeply embed that cultural change, and we are on track.”

Last September Barclays was fined £50m and branded “reckless” by the FCA for failing to disclose payments of £322m in advisory fees to Qatari investors who helped bail it out during the financial crisis.

The bank also paid £290m in fines to US and UK regulators in June 2012 over its traders rigging the Libor and Euribor interbank rates, in a scandal that saw Jenkins’s predecessor, Bob Diamond, ousted.

Barclays’ profits from UK retail and business banking fell 2 per cent to £351m in the latest period. However, unlike rival Lloyds on Tuesday, the bank said that its provision for mis-selling payment protection insurance remained unchanged.

Jenkins said the group was “well-positioned” to capitalise on a gradually improving global economy.

 

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