LONDON, Nov 7 (Reuters) - Royal Bank of Scotland will announce on Tuesday it is setting up a compensation scheme worth more than 300 million pounds to help small businesses, amid allegations of malpractice at its small business restructuring division, sources said.
The taxpayer-owned bank is expected to admit some wrongdoing over the way its Global Restructuring Group (GRG) handled small businesses, while stopping short of claims they were deliberately pushed into administration, the sources said.
RBS declined to comment.
The allegations have damaged the bank’s reputation and hobbled its recovery after hundreds of small businesses said the GRG mistreated them or forced them out of business.
RBS has previously vigorously contested allegations that the GRG deliberately pushed small businesses to bankruptcy so it could pick up their assets cheaply.
The bank is preparing for the outcome of an investigation by the Financial Conduct Authority into the treatment of small businesses.
Paying customers off could avoid costly litigation, which includes a possible class action from hundreds of businesses.
Reuters has previously reported that the cost to the bank of settling claims from small firms could run into billions of pounds. (Reporting by Andrew MacAskill in London; editing by Andrew Roche)