RBS to end free banking for businesses

RBS to end free banking for businesses

Royal Bank of Scotland is axing free banking for thousands of business account holders, in a move that has sparked outrage from customers and business organisations which slammed the move as 'mean and despicable'.

Simon Baxter, a corporate customer with RBS since 1990, says: 'This smacks of desperation. It's unacceptable that the bank is making loyal customers pick up the tab for mistakes it made by overextending itself in the credit markets.'

RBS has created uproar in the City since announcing 10 days ago that it was seeking £12bn from shareholders, after being hit for billions by credit crunch write-downs. Only two months earlier, chairman Sir Tom McKillop and chief executive Fred Goodwin had said there was no need to raise capital.

The bank's predicament has been made worse by its acquisition of parts of ABN, the Dutch bank, at the top of the market last summer. Thousands of jobs are being cut as part of integrating the new operations with RBS.

RBS spokeswoman Carolyn McAdam says: 'We are ending free banking for [a few thousand] of our 1 million business customers.' She was unable to be more specific about the number.

But in a letter sent to business customers by Steve Pateman, CEO of UK business banking, RBS states: 'With effect from 2 June, we will only offer free banking to start-up customers and your account will therefore be chargeable at our standard tariff rates.' This includes a monthly fixed charge of £10 a month,.....continued below

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or £120 a year.

Stephen Alambritis of the Federation of Small Businesses says: 'It is totally wrong for RBS to take things out on the small- and medium-sized enterprise sector when the bank is still making big profits. Many small businesses make their plans on the basis of free banking; this is symptomatic of the way the sector gets picked on by big institutions.'

McAdam said the move had nothing to do with the credit crunch. 'For a very small number of our business customers, who have legacy agreements with us, we are making the change from free banking to a new form of account,' she said.

Britain's banks are under fire from non-business customers for bank charges levied on unauthorised overdrafts. Two weeks ago, the Office of Fair Trading won a test case to establish that such charges come under 'unfair contract' rules designed to protect the public.

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