Royal Bank of Scotland (RBS) has rejected calls to increase the £400m ($500.46m) fund to compensate small businesses affected by its Global Restructuring Group (GRG).
Ross McEwan CEO at RBS said that the bank did not intend to repay customers who claim that the bank deliberately pushed their companies into administration.
"It is highly unlikely that businesses suffered material financial distress as a result of the bank's actions," McEwan said. The UK taxpayer owns 73% of the British Bank, RBS.
McEwan's statement was in response to Andrew Tyrie letter to the bank. Tyrie, who is a politician and chairs parliament's Treasury Select Committee wrote to RBS asking if the proposed £400m compensation fund was too small as a customer action group planning to sue the bank already has claims worth £2bn.
RBS set up the compensation fund in late 2016 amid allegations that the British bank's controversial turnaround division, GRG, had squeezed many small businesses by restructuring their deals and eventually purchasing their assets at a lower price. The fund was said to be part of GRG's so-called 'Project Dash for Cash' strategy.
According to reports, RBS staff was allowed to boost their bonuses by identifying companies that could be squeezed.
RBS has already refused these allegations. The bank now plans to offer some of the companies moved into GRG, a certain type of fee that they had earlier paid to RBS for its services.
Following McEwan's response, Tyrie asked the UK's financial regulator, the Financial Conduct Authority (FCA) to fix a publication date for its review into these allegations.
Andrew Bailey, CEO at FCA has replied to Tyrie, that the regulator would publish its findings on GRG once its investigations are completed. "The FCA will provide a further update on this matter when it is in a position to do so and will publish a full account of its findings when practicable once our work is concluded," Bailey was quoted as saying by Reuters.
The letters by McEwan and Bailey were published by Tyrie on Friday.