Mark Carney troubled at RBS allegations

Mark Carney said that allegations that small businesses were driven to collapse by the Royal Bank of Scotland were "deeply troubling"

Bank of England Governor Mark Carney
Bank of England Governor Mark Carney

Allegations that small businesses were driven to collapse by the Royal Bank of Scotland were “deeply troubling” and ought to be pursued “to the fullest extent of the law”, Bank of England governor Mark Carney has said.

Mr Carney said the Financial Conduct Authority had been informed but agreed that it was “shocking” that the allegations had not been picked up earlier.

A report by Business Secretary Vince Cable’s adviser Lawrence Tomlinson alleges RBS drove firms to collapse in order to buy back their assets at rock-bottom prices.

Mr Carney told MPs on the Treasury Select Committee that the claims were “deeply troubling and extremely serious”, adding: “It is the direct responsibility of the FCA to conduct an appropriate investigation. This has to be tracked down to the fullest extent of the law.”

In a combative session, Mr Carney also mounted a robust defence of forward guidance - accusing its critics of a “failure of logic” - and said he was offended by suggestions that he was too close to Chancellor George Osborne.

During the wide-ranging hearing, he also defended his views on the importance of the financial sector to the UK, and acknowledged doubts about the quality of economic data provided by the Office for National Statistics. He also pledged that increasing the number of women running the Bank of England would be a central priority.

On RBS, Mr Carney dismissed the idea that “predatory restructuring” of businesses could be a consequence of rules obliging banks to increase the ratio of capital they hold, saying: “This behaviour is a fundamental violation of the banking relationship.”

Pressed on whether such practices should have been picked up earlier by regulators or within RBS, he said: “If these activities proceeded on any sort of scale, I think it is remarkable. It is shocking.’’


David Whetstone
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