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RBS delay in pursuing customers RBS offers mortgage arrears delay
(about 7 hours later)
The Royal Bank of Scotland (RBS) has guaranteed not to repossess the properties of customers who fall behind on payments for at least six months.The Royal Bank of Scotland (RBS) has guaranteed not to repossess the properties of customers who fall behind on payments for at least six months.
The bank, which owns NatWest, is the first to follow government guidelines created to help struggling homeowners. The bank, which owns NatWest, is Britain's fifth largest mortgage lender with a 7% market share.
RBS will also let customers seek independent advice before starting legal action. The government has bought a 58% stake in RBS as part of its recapitalisation plan for the banking sector.
The government formally took majority control (58%) of the country's fourth largest bank on Friday. The announcement will put pressure on the biggest mortgage lender, HBOS, which has also taken taxpayer cash.
The move was part of the government's attempt to save Britain's struggling banking sector. RBS also said it would make sure customers had the opportunity to seek independent advice before starting any legal action.
The Royal Bank of Scotland (RBS) said it would also allow customers to seek independent advice before starting any legal action. The news was welcomed by Citizens Advice and also the charity Crisis, which represent homeowners struggling with arrears.
The news was welcomed by Citizens Advice and the charity Crisis, who represent homeowners struggling with arrears.
'Normal lending practices'
Last week, Treasury minister Ian Pearson said he would hold all banks' "feet to the fire" to ensure customers were treated fairly.Last week, Treasury minister Ian Pearson said he would hold all banks' "feet to the fire" to ensure customers were treated fairly.
'Normal lending practices'
RBS' decision may not be entirely down to government pressure, observers say.
"At a time when house prices are falling, banks don't really want to do repossessions because all they end up with is no money coming in from the mortgage loan and they end up with a stock of houses, which they probably can't sell," said Jonathan Charley from the consultants EDS.
"So, for most banks they'd rather avoid having repossessions and actually just get some form of money coming in from people."
RBS shareholders voted to take the government money at a meeting last week.RBS shareholders voted to take the government money at a meeting last week.
Among the other conditions attached to the deal, the bank has lost freedom in areas such as executive pay and dividend policy. Among the conditions attached to the deal, the bank has lost freedom in areas such as executive pay and dividend policy.
RBS also had to agree to return to "normal" lending practices, and has already it announced that it would guarantee overdraft rates and contracts for its business customers for at least a year. RBS also had to agree to return to "normal" lending practices, and has already it announced that it will guarantee overdraft rates and contracts for its business customers for at least a year.
'Lending problems' class="bodl" href="/1/hi/business/7753845.stm">Government to own majority of RBS
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The government's shares will be held by a company called UK Financial Investments Ltd, which is supposed to maximise value for taxpayers and prevent politicians making business decisions about banks.
RBS is one of the many banks that has been hit by its exposure to debt based on US sub-prime loans.
It has also struggled with the collapse in inter-bank lending as the whole industry worried about which of their peers they could afford to lend to.
Critics say that RBS paid too much to buy ABN Amro last year.
It led a consortium that paid 71bn euros ($91bn; £61bn) for the Dutch bank in October 2007.
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