Three quarters of the staff and nearly all the senior managers at Royal Bank of Scotland’s new division, which supports struggling businesses, previously worked at its controversial Global Restructuring Group, which has been accused of pushing firms into bankruptcy.
The Treasury select committee, which last week published a full report into the GRG scandal, said 136 of 182 employees at the current restructuring business and 30 out of 32 senior managers came from GRG.
At a select committee hearing in January, the RBS chief executive, Ross McEwan, said he believed only two senior managers had come from GRG, including the head of restructuring, Laura Barlow. RBS now says this comment referred to only the most senior management grade.
Nicky Morgan, the chair of the committee, said: “Mr McEwan has assured the committee that the culture at RBS Restructuring is fundamentally different from that of GRG.
“The discovery that almost all the senior management in the new unit previously worked at GRG raises concerns that there has merely been a rebranding exercise.
“I have asked Mr McEwan to set out how the training programme and performance objectives of these staff have been developed to address the toxic culture described in [last week’s] report.”
The bank has so far paid £1m in claims to GRG’s victims, and expects that to rise to £5m, according to a letter from McEwan to the committee.
Morgan said the payments so far were surprisingly low. She added: “There remains a substantial sum of money – up to £280m – within RBS’s earmarked budget for its complaints process, which could be paid out under consequential losses.
“Mr McEwan has acknowledged that consequential loss is often far greater than direct loss. To provide confidence that fair and reasonable compensation is being provided, decisions on consequential loss must be subject to independent oversight. RBS shouldn’t be marking its own homework.”
Last week’s report, commissioned by the City watchdog, the Financial Conduct Authority, concluded that the behaviour of GRG staff was “endemic” and that managers ought to have been aware of the damage that was being done to small businesses. The Treasury committee labelled RBS GRG’s behaviour as “disgraceful”.