The Royal Bank of Scotland (RBS) said Tuesday it will set aside £400 million ($496 million) in the current quarter to cover costs associated with complaints from some of its small business customers in the aftermath of the global financial crisis.
Taxpayer-owned RBS said the decision is part of an agreement with the U.K.'s Financial Conduct Authority that followed an investigation into its Global Restructuring Group (GRG) and the fees that unit charged to small-and-medium-sized business clients.
"We have acknowledged for some time that mistakes were made. Some of our customers went through what was a traumatic and painful experience as a result of the crisis. I am very sorry that we did not provide the level of service and understanding we should have done," said CEO Ross McEwan in a statement. "Although the FCA review into the historical operation of GRG continues, we believe that now is the right time to deal with the areas where we accept some customers were let down in the past."
GRG, a unit that operated between 2008 and 2013, managed SME clients of the bank which were in financial difficultly in the wake of the global crisis. While the FCA said it found no evidence that RBS "artificially engineered a position to cause or facilitate the transfer of a customer to GRG ... and that all clients transferred to GRG were exhibiting clear signs of financial difficulty", RBS said it "could have done better" in terms of managing the transition to the group, explaining the complex fees involved and managing complaints.
In the bank's third quarter earnings report, published on October 28, RBS said it has set aside £425 million to cover what it called "litigation and conduct costs" associated with two outstanding U.S. lawsuits relating to residential mortgage backed securities.
RBS shares closed at 186.42 pence each Monday in London, up 0.77% on the session. The shares have risen 4.6% over the past three months.