The Royal Bank of Scotland is in hot water with small and medium-sized businesses, and reports on Monday (April 25) have put a price tag on those legal troubles.
Reports said the bank is getting sued for $1.45 billion in damages from 50 small businesses on claims that RBS drove these companies to ruin through its Global Restructuring Group (GRG).
The GRG, now out of operation, is alleged to have forced bankruptcy on small and medium-sized businesses by misleading them and forcing higher fees on these customers. Specifically, allegations emerged that RBS forced these small businesses to default on their loans, allowing the bank to lessen its exposure and regulatory pressures that were a result of lending to SMEs.
The claims hit the bank nearly three years ago, leading the U.K. Financial Conduct Authority (FCA) and Serious Fraud Office to investigate the institution, as well as RBS to launch its own probe into the matter.
The FCA is expected to publish its report on the allegations within just a few weeks, reports said.
Last year, new claims against the bank surfaced as a group of lawyers formed the RBS GRG Litigation (RGL) group, encouraging other small businesses to come forward with their claims against the bank.
That group is now said to have processed 50 SME claimants just one month after it launched, according to reports.
“We believe this has the potential to be a huge claim,” said RGL Chief Executive James Hayward in an interview with The Guardian. “Single businesses within our group have losses of tens of millions of pounds, and thousands of businesses suffered as a result of GRG’s actions.”
“The rate at which we are being contacted by businesses suggests our claim will be very significant,” he continued.
“We believe we have a strong case and will defend these claims vigorously,” a spokesperson for RBS told the publication.