RBS CEO Hester Defends Lending Record, Independence
March 15 2012 - 10:55AM
Dow Jones News
Royal Bank of Scotland Group PLC (RBS) Chief Executive Stephen
Hester on Thursday defended his bank's lending record and said RBS
shouldn't become a "sponsored arm" of the state whose job is to
dole out cheap credit.
In recent months, RBS, which is 82% government owned, has come
under criticism for pushing up interest rates on some loans at a
time when the U.K.'s base rate remains at historic lows.
"It's not that banks are profiteering--profits at all banks
remain below target--it's that banks' costs have risen relative to
base rate, too," Hester told the British Chambers of Commerce
annual conference. RBS' average lending interest rate to businesses
was at 2.9%, he added.
Like other banks, RBS is under political pressure to boost
lending to kick-start the U.K.'s sluggish economy. Hester said the
problem lies with businesses who don't want to borrow.
The CEO said that RBS' U.K. business customers had GBP30 billion
of untapped credit lines. "One of the issues we all have to
confront right now is that businesses don't have confidence,"
Hester said. "And when businesses don't have confidence, they don't
invest, they save more, they pay down debt."
Hester added that RBS' independence was key in ensuring
lending.
"I don't think RBS should be used as a sponsored arm of the
state," he said, adding that the bank shouldn't be used to snuff
out competition.
This followed calls by a top U.K politician to split RBS into a
vehicle focused on lending to U.K. businesses.
- By Max Colchester, Dow Jones Newswires; +44 (0) 207 842 9295,
max.colchester@wsj.com
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