The bank bought up assets cheaply from failing businesses it claimed to be helping, the confidential files reveal.
Staff could boost their bonuses by finding firms which could be squeezed in what it called a “dash for cash”, reports The BBC.
RBS said it had let some small business customers down in the past but denied it deliberately caused them to fail.
The cache of documents, passed by a whistleblower to BuzzFeed News and BBC Newsnight, support controversial allegations in a report three years ago by the government’s then entrepreneur in residence Lawrence Tomlinson.
He accused the taxpayer-owned bank of deliberately putting viable businesses on a path to destruction while aiming to pick up their assets on the cheap.
The documents show the bank’s efforts to make money out of struggling businesses were ramped up after the 2008 financial crisis.
More than 12,000 companies were pushed into the bank’s controversial “turnaround” division – the so-called Global Restructuring Group (GRG) – in the wake of the crash.
Customers could be put into the division simply for falling out with the bank.
Between 2007 and 2012, the value of loans to customers in the GRG increased five-fold to more than £65bn.
Many of the small business owners affected say they have not only lost their businesses but also experienced family break-ups and deteriorating physical and mental health due to the stress of their treatment at the hands of the bank. Others have been made homeless or bankrupted.
The documents confirm that bank staff were rewarded with higher bonuses based on fees collected for “restructuring” business customers’ debts – cutting the size of their loans and getting cash or other assets from the customer.
In what was described by an RBS executive as “Project Dash for Cash”, staff were asked to search for companies that could be restructured, or have their interest rates bumped up.
The documents also show that where business customers had not defaulted on their loans, bank staff could find a way to “provoke a default”.
Many business owners complained that unrealistically low valuations were used to claim they had breached their borrowing limits and force them into the GRG.
From there the bank sought to squeeze cash from the businesses through higher interest and fees, pressuring customers to sell assets to pay down loans, taking an equity stake in their businesses, or by pushing the business into administration.
The bank told Newsnight: “RBS has been very clear that GRG’s role was to protect the bank’s position… In the aftermath of the financial crisis we did not always meet our own high standards and we let some of our SME customers down.
“Since that time, RBS has become a different bank and significant structural and cultural changes have been put in place, including how we deal with customers in financial distress.”
But the bank insisted that a detailed review of millions of pages of documents had found no evidence that “the bank artificially distressed otherwise viable SME businesses or deliberately caused them to fail.”
