Royal Bank of Sctoland to close down controversial turnaround division
09 August 2014
Royal Bank of Scotland (RBS) is closing down its controversial turnaround division and the two most senior executives who are heading it, would leave the bank, Gulf Daily News reported citing a source.
The global restructuring group (GRG) was tasked with the recovery of loans from customers struggling to pay and faced accusations of UK government adviser Lawrence Tomlinson of pushing small businesses to collapse and then profiting from their demise.
According to an independent report commissioned by RBS, the 81-per cent government-owned bank, was cleared of attempting to defraud its customers.
However, RBS nonetheless said it would bring changes to its practices while dealing with borrowers in distress.
According to the source, staff was informed of the closure by email yesterday.
The email further said that Derek Sach, heading the division, and Aubrey Adams, leading its property division, would both leave the bank on 31 March, 2015.
Sach attracted criticism of a UK parliamentary committee for insisting that the restructuring group was not a profit centre when the bank later wrote to the committee accepting the use of the term.
Laura Barlow, who joined RBS in 2009, had been appointed to head RBS's new restructuring unit, which would be more integrated with the main bank than the restructuring group was, according to the source.
The move to close GRG as a standalone unit comes with the UK's economic recovery, which led to a sharp drop in the number of restructuring cases, The Guardian reported.
According to RBS chief executive, Ross McEwan's, comments a few weeks ago, the number of cases being referred to GRG was down by 40 per cent. The lender had set up an internal bad bank, that had taken on a lot of GRG cases.
Among the number of prominent turnaround cases that the division had dealt with are luggage maker Samsonite, Liverpool FC and Thomas Cook.
Sach and Chris Sullivan, the bank's deputy chief executive, denied GRG was run as a profit centre during interrogation by MPs on the Treasury select committee in June.
However in a letter to committee chair Andrew Tyrie, Sullivan subsequently admitted that the operations had run that way in terms of its accounting basis.