Bank accused of blackmailing businesses over bridging loans

Bank accused of blackmailing businesses over bridging loans




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As small and medium sized businesses continue to come up against slammed doors and blunt refusals when trying to access credit, it has emerged that state-backed lender, Royal Bank of Scotland, has been demanding that corporate clients sign it up as an investment banking adviser in return for bridging loans.

According to a report in the Telegraph newspaper, companies are coming forward, albeit anonymously, to shed light on the bullying tactics the bank is using to “blackmail” firms.
 
Locking customers into promising higher margin investment banking work is known as “tying”, and whilst the technique allowed in Europe, it is illegal in the US.
 
The practice is thought to be driven from the top, with executives eager to pay back the taxpayers’ £20 billion as soon as possible. An RBS spokesman has already defended the claims, stating: “We have a core group of clients that we want to partner across our wholesale banking spectrum. This includes deploying capital as prudently and effectively as possible.”
 
However, one company boss has told the newspaper: “They have the whip hand and are leveraging that to get a commercial upside. When you have choices that's just commercial savvy, when there are no alternatives it is just plain bullying.”  

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