RBS pledge to help SMEs

The Royal Bank of Scotland (RBS) has pledged to small and medium sized enterprises (SMEs) who are suffering as a result of the economic slump.

Rising borrowing costs has had an affect on many firms and the new measures will see RBS freeze overdraft charges for its business customers for at least a year, commencing next Monday, December 1.

Furthermore, it has pledged not to withdraw its lending facilities for its 1.1 million business customers.

RBS, which is Britain’s second largest bank, is also pulling together a team of 500 experienced bankers to offer advice and help to businesses who are struggling amid the deteriorating economic climate.

According to Stephen Hester, newly-appointed CEO, business established after 2002 are likely to be most at risk since they do not have experience in dealing with an economic slump.

The move has been welcomed by many and Stephen Alambritis of the Federation of Small Businesses (FSB) believes that other banks should follow in the footsteps of RBS.

In related news, the bank is to raise up to £15 billion, through which the Government is underwriting a share issue at 65p a share. However, it is likely that the taxpayer could be left holding almost 60% of the bank if shares remain below this level.

The bank has suffered recently after earlier this month, it announced further write-downs on credit assets totalling £206 million, on top of the £5.9 billion it reported in the first six months of the year.

Finally, the bank recently announced it is to axe 3,000 staff from its global banking and markets division.

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