Royal Bank of Scotland (RBS) is planning to shut down its controversial global restructuring group following allegations that it has put companies out of business to generate a profit.
As part of the closure, GRG head Derek Sach and property chief Aubrey Adams will quit the bank at the end of March 2015.
The GRG division, which now employs 670, will be replaced by a smaller restructuring group led by former GRG UK chief Laura Barlow.
In his new role, Barlow will work together with RBS’s existing businesses to assist distressed clients who are struggling with repayments. The new restructuring unit will be more integrated with the main bank than the restructuring group.
However, certain assets that are currently being restructured have been transferred to RBS’s newly created bad bank called RBS Capital Resolution (RCR).
Last year, Government adviser Lawrence Tomlinson claimed that the unit had forced firms to the brink and then profited by buying up their properties.
The shut down comes as the British economy improves, which has resulted in a fall in the number of restructuring cases.
RBS has appointed law firm Clifford Chance to investigate Tomlinson’s claims, while Financial Conduct Authority is conducting its own investigation into the matter.
Additionally, the bank has also shut down its West Register property unit, which both advised distressed businesses on property matters and bided for their properties.
Andrew Tyrie, the chairman of the parliamentary Treasury committee, said: "The important issue here is whether RBS is now – and is seen to be – acting in the long-term interests of its shareholders and SME customers."