Unite Blasts RBS For Support Of Cadbury Takeover

The Royal Bank of Scotland is under fire from Unite, MPs and many other critics for acting against the best interests of the UK economy by backing foreign takeover bids and dodging its commitments on lending.

A coalition of unions and MPs said a £630m RBS loan facility to Kraft, the US firm bidding to buy Cadbury, should be examined by ministers to prevent taxpayer funds being used to undermine the independence of British companies.

Unite, the union representing Cadbury workers, expressed concern about RBS's role in supporting the takeover of one of the last big British-owned manufacturers – particularly since Kraft has so far failed to give firm commitments on job losses or plant closures.

A Unite spokeswoman said: "It hasn't escaped our attention that we have got a bank that is owned by the taxpayer partly funding this bid." She said the union was demanding an urgent meeting with Kraft's senior management to clarify its plans if the bid succeeds.

The union's complaints were joined by Labour MP Khalid Mahmood who has written to the chancellor, Alistair Darling, expressing concerns about mass redundancies if Kraft is successful in its £9.8bn takeover. He called for an investigation into how RBS was being allowed to lend the US firm millions of pounds if it meant factory closures and an attack on workers' rights.

In a separate development, City bankers, who have asked not to be named, are claiming RBS is buying up loans held by foreign banks in order to meet government lending targets.

A loan bought from another bank in the secondary market counts as a new lending even though it does not channel fresh funds to customers. Critics say this activity does little to get credit flowing to UK businesses and individuals – the primary intention of the loan targets set by the Treasury as part of the deal under which the state-controlled banks received taxpayer bailouts.

The bank, which has been criticised for failing to meet lending levels, has targeted foreign institutions – such as banks in Spain, Germany or Ireland – that need to retreat from Britain to reduce their balance sheets.

"We've seen that [RBS] is desperate to try to meet its guidelines to increase their lending," said one banker. "They are willing either to extend their existing commitments or to buy commitments from other banks."
RBS is also selling some of its non-British loan portfolio as it tries to shrink its balance sheet and use the proceeds to increase UK lending, the banker said.