Royal Bank of Scotland’s (RBS) lending policy under political pressure

Vince Cable the Deputy leader of the UK Liberal Democrats wrote to the Business Secretary Lord Mandelson and the Chairman of the Royal Bank of Scotland to demand that the loan given by the bank to a company owned by Oleg Deripaska should be repaid on time.

Vince Cable said in his letter to the Royal Bank of Scotland: “The Royal Bank of Scotland is now supported by the British taxpayer and its priority should be to allocate credit to British companies, particularly small firms, that are being squeezed by the credit crunch.

“It would be absolutely wrong for a bank dependent on taxpayer funding to tie up large amounts of capital in international loans of this kind.

“I trust we can rely on Lord Mandelson to put his weight behind this demand so that small businesses in Britain can benefit.”

Below you will see the body of the letter than Vince Cable sent to Lord Mandelson.

Dear Sir Tom, Publicity has been given to the loan which I believe you have extended to Mr. Deripaska’s company to assist with the acquisition of Norilsk Nickel. I am writing to seek assurances that you will insist on repayment on the due date so that funds will be available to British small and medium sized businesses and personal customers. There should be no question of a British bank, now financed by the UK taxpayer, extending this loan under any circumstances.

The initial loan was extended under very different circumstances from the present. Since the UK Government has now extended large scale funding to recapitalise RBS, your lending policy is under much greater scrutiny and I am sure that you will agree that it must reflect the wider UK national interest.

I am copying this letter to the Secretary of State for Business and Enterprise who will, I am sure, concur that the priority for UK bank lending must be the small business sector.
Yours sincerely, Vincent Cable MP

Source: libdems