RBS slashes its fees to charm small business

ROYAL Bank of Scotland has launched a major charm offensive on small firms by promising to halve their overdraft fees.

From the end of this month, businesses will pay 15 per cent interest if they tip into the red without authorisation – instead of the current 29.5 per cent.

There will also be reduced fees for unpaid cheques and a lower maximum charge that companies can rack up each month.

Alison Rose, from the state-backed lender’s commercial banking arm, said: ‘It will affect our profit, it will go down. But we feel this is the right and fair thing to do.’

More than one in four British small businesses bank with RBS, which was rescued with a £46billion bail-out in 2008. However the lender has faced criticism for its treatment of small firms.

For two years RBS has been battling explosive allegations made in a government-backed report that it systematically destroyed viable firms to boost profits. Bank bosses have denied the claims.

The City watchdog is also preparing to publish a report into its now-closed ‘restructuring’ division, which could cause further embarrassment for the bank.

John Allan from the Federation of Small Businesses said the reduction in fees by RBS was a ‘step in the right direction’ to help the bank ‘rebuild trust’ with small firms.