Royal Bank of Scotland expects to profit from Big Society Bank, director tells MPs

Priority is financial health of the taxpayer-rescued bank, independent director Sir Sandie Crombie tells Public Administration Select Committee

Royal Bank of Scotland
Royal Bank of Scotland

A director of the Royal Bank of Scotland has told a committee of MPs that it expects to make a profit from the Big Society Bank in order to reduce its debt.

Sir Sandy Crombie, senior independent director at RBS, said the commercial terms on which RBS and other banks would provide £200m of capital to the Big Society Bank had yet to be agreed.

But he said RBS expected to get "an element of return" and that voluntary organisations funded by the new financial institution would be expected to produce "financial returns that are adequate to service the debt".

Crombie’s comments came during the Public Administration Select Committee’s third evidence session on philanthropy and funding of the voluntary sector, which took place this week.

He said he expected commercial terms to be finalised after the Big Society Bank’s business plan and structure had been agreed. 

Asked whether RBS might be tempted to "whack up the rates", Crombie said: "The Big Society Bank has a remit to be self-sustaining. It has to make a return on its money. Its funders expect to get an element of return. But I think there is plenty of room for discussion when the plan is produced around what that return will be."

Kelvin Hopkins, Labour MP for Luton North, said the banks could provide the sum required for capitalisation "without blinking".

"To be mean about the loans seems to me to be a bit churlish, given the vast sums of money paid by taxpayers to RBS to bail you out," he said.

Crombie replied: "I don’t think you should presume the banks will be mean."

Bernard Jenkin, Conservative MP for Harwich and North Essex and chair of the committee, had earlier asked Crombie how RBS squared its reputation for social responsibility with large staff bonuses.

Crombie said the priority was to restore the financial health of the institution and not to get involved in moral arguments about what staff did with their bonuses.

"The country has contributed £45bn to the bank to keep it alive," he said. "There’s a lot of value to be put back into RBS before that repayment can be made without a loss of money.

"The country might expect to make some sort of profit on the deal. The focus of the board is to try to get that value put back into the bank, swallowing what it has to swallow in order to get that done."

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