Small Business Customers to Suffer Relegation
Thursday, June 11, 2009 16:29
Royal Bank of Scotland is planning to transfer thousands of its small business customers to a separate division as it cannot make a profit out of them. The move will lead to some of them being treated more harshly than other customers.
In an internal memo sent to senior staff in RBS’s small and medium-sized business division last week and seen by The Times, managers were instructed to divide customers into two camps. Some will be put into the bank’s “core” division, and others will be relegated to a “non-core” category.
The memo says that among the customers who should be considered for the non-core area are those on the most competitive loan deals, which RBS offered at up to 2% above the Bank of England base rate.
The process of deciding how to categorise customers is at an early stage. There is no need to advise customers of these changes at the moment. The memo emphasises to managers that all customers must be treated according to the FSA’s principles of “treating customers fairly”. The memo says that in the case of non-core customers, managers must focus on “restructuring or repricing debt rather than on funding for new investment”. Even in the case of core customers, RBS is likely to try to raise the price of their loans when they come up for renewal I an attempt to boost profits.
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