ROYAL Bank of Scotland could face criminal prosecutions following claims it drove businesses to the wall over a five-year period, Business Secretary Vince Cable has warned.
The Liberal Democrat said the evidence against RBS was solid and dated back to 2008. His comments came as it emerged that other banks face similar allegations, albeit on a smaller scale.
Ministers have passed evidence, compiled by businessman Lawrence Tomlinson, to regulators.
Yesterday RBS said it had called in leading law firm Clifford Chance to review its practices.
It has been controlled by the UK Government since 2008, when it received a £46 billion bailout.
Mr Tomlinson's report found RBS placed some good, viable businesses into default in part so it could take over their assets.Chancellor George Osborne said the allegations were "shocking".
The Business Secretary also raised the prospect of future criminal prosecutions. He said: That requires to be established and we're certainly looking to the regulators and the bank to involve the authorities if there is any suggestion of criminal behaviour."
None of the businesses thought to have been affected have been officially named by the Coalition to prevent reprisals from the bank, Mr Cable said.
A separate report by former Bank of England deputy governor Sir Andrew Large found RBS was turning away too many small business loans at an early stage. It blamed the bank's fear of sanctions if it accepted too many applications that "turn bad".
The allegations RBS forced some companies to collapse focus on the bank's Global Restructuring Group (GRG), which handles loans classed as risky. The department can charge hefty penalties to companies not complying with the terms of their loan.
According to the Tomlinson report some companies found themselves in GRG after minor defaults or administrative technicalities, such as late filing of minor financial information. They were then hit by large fees, which in some cases caused them to collapse allowing RBS to buy their property and assets on the cheap.
One business told Mr Tomlinson it had paid £256,000 in fees alone while in GRG.
A spokesman for RBS said GRG's role was key to helping the bank put its past failures behind it.
He said: "GRG successfully turns around most of the businesses it works with, but in all cases is working with customers at a time of significant stress in their lives. Not all businesses that encounter serious financial trouble can be saved."
John Allan, from the Federation of Small Businesses (FSB), said regulators had to "swiftly address any issues raised to restore trust in the banks."
Labour's shadow business secretary, Chuka Umunna, said the claims were "extremely serious".
Andrew Tyrie, chairman of the Commons Treasury Committee, said it confirmed what his committee had heard "for a number of years". He added: "The actions and reputation of RBS have discouraged would-be customers and reduced SME activity. We have all lost out as a result."
Stewart Hosie, the SNP's Treasury spokesman, said he was pleased the report had been forwarded to the Prudential Regulation Authority the Financial Conduct Authority and said it must act "swiftly".
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