RBS (RBS) has had a tough few weeks. Earlier this month, the part-nationalised lender disappointed with news of a £634m third-quarter operating loss - the shares slumped 12 per cent in the week following that grim trading update. While, this week, the pressure has continued - after an adviser to Business Secretary Vince Cable claimed that the lender had been forcing viable small businesses into default in order to boost profits.
That report is now with the bank's regulators and RBS has appointed law firm Clifford Chance to look into the allegations - so investors can expect a drawn out examination with the potential to further damage sentiment. That, of course, can be added to a list of other worries - such as a lack of any real clarity over the government's longer-term strategy for reprivatising RBS. There's also the potential for business misconduct charges to grow - from mis-sold payment protection insurance products, but also from having mis-sold interest rate products. The lenders' capital adequacy doesn't inspire confidence, either - in June regulators named RBS as having the biggest capital hole to fill among the main UK lenders.
