Banking: Lending

Lord Forsyth of Drumlean Excerpts

Tuesday 12th November 2013 Lords Chamber

[Lord Newby]

My Lords, the decision on setting up the bad bank was, primarily, for the management of RBS. The Treasury and UKFI are obviously in regular contact with RBS.

[Lord Forsyth of Drumlean (Con)]

Does my noble friend not agree that one of the reasons that the banks have had difficulty in providing loans for small business is the disastrous state of their balance sheets, which was the responsibility of the ridiculous monetary policy followed by the previous Government?

[Lord Newby]

My Lords, that was clearly a major contributory factor. However, I refer noble Lords to the review undertaken by Sir Andrew Large for RBS, which found that the bank had failed to meet its own lending standards, had risk-averse staff and took longer to process applications than other banks, and that its treatment of customers in financial distress had led to major negative perceptions of the bank. The bank is now, at long last, moving to tackle many of those issues, but the failures in the way that RBS ran its business were a major contributory factor to its failure in recent years to lend to SMEs the amounts it set itself in its target.