We all know about the billions of pounds of toxic loans that Britain’s banks are desperate to offload from their balance sheets.
Less well known is that Royal Bank of Scotland and Lloyds — and probably Barclays, too — are also combing through their books to identify thousands of ordinary personal and business customers who they would be quite happy to see the back of.
Some will have defaulted on their loans or credit cards. But in many cases, their only crime will be that they got too generous a deal out of their bank when lenders thought that any business was worth having, no matter the price.
When Egg, the internet banking business that Citigroup bought from the Prudential, pulled the plug on many customers last year, there was uproar. Egg claimed that it was kicking out those with bad credit histories. Hundreds of angry customers insisted that they had never missed a payment — suggesting that Egg just wanted out of the market and was doing it in a rather shabby fashion.
Some RBS insiders fear that the government-controlled bank may be about to do an Egg.
Advertisement
RBS admits that it will push thousands of customers from whom it cannot make profits into a separate division. But it insists it is not doing anything underhand and that these customers will not be treated any differently from those who stay in the main business.
Of course, banks have got to reprice their loans to reflect the new reality of much higher costs of funding and the demands from investors and regulators for them to bolster their balance sheets.
But they must also be upfront about what that actually means.