RBS to wind down €3.6b property unit

The Royal Bank of Scotland has promised to wind down all assets of its controversial £3 bn (€3.6 bn) West Register property division.

In a statement RBS acknowledged 'there was a damaging perception that the bank had a conflict of interest when it purchased a property as part of a restructuring process'.

'The bank has taken the decision to wind down and sell any assets in West Register,' the UK lender said in a statement.

The move follows allegations by a commission led by Lawrence Tomlinson that RBS had created a conflict of interests by setting up the West Register unit. However, a report by law firm Clifford Chance said that the allegation was unfounded.

‘The trust that a bank has with its customers is fundamental,' said Ross McEwan, RBS CEO. 'That trust was put at risk at RBS by the allegation of systematic abuse made in the Tomlinson report. I welcome the Clifford Chance findings which show no evidence of the serious and damaging allegation that we had set out to deliberately defraud our business customers.'

West Register's portfolio includes a wide range of property types including residential assets, care homes, hotels and pubs. RBS set up West Register in the wake of the financial crisis to buy assets in the open market that were put up for sale by administrators or receivers that were appointed as a result of borrowers being unable to pay back RBS debt.

West Register was put under scrutiny after Tomlinson, the former entrepreneur-in-residence at the Department for Business, Innovation and Skills, said that the activities of the unit created conflicts of interest with the parent group. In a report, Lawrence alleged that RBS, through its Global Restructuring Group (GRG), was guilty of systematically setting out to defraud its small business customers.

RBS subsequently appointed Clifford Chance to undertake an external review of the central allegation made in the report. In its conclusions published last week, Clifford Chance said that there was no evidence to support Lawrence's allegation.