The text from his letter follows:

Dear Sir Andrew,

I want to take this opportunity to thank you for your review into small and medium sized business lending at the Royal Bank of Scotland.

It is a tough read for the bank, but we asked you to conduct this review to challenge us and identify the steps we need to take to support more SMEs, and to make sure we are doing everything possible to support the UK economy. Your report provides a thorough and balanced analysis of the business.

Your report recognises the measures that have been taken already to sharpen our focus on the customer - but it also sets out the many areas where we fall short of what our customers deserve.

It is clear from your report that we have over corrected for the reckless lending practices that broke this bank five years ago. We can never return to those days again and your report recognises the steps we have taken to re-balance and stabilise the bank. But in many cases the pendulum of risk aversion has swung too hard to one side. As you have identified there are loans that we could, and should be making, but are not. You have shown that in many cases we are too complicated and too slow to react to the needs of our customers.

We recognise that the bar is set higher for RBS than any other bank, because we were rescued at the public expense. We have an obligation to do more than any other to support the British recovery.

That is why we accept the recommendations you have set out. We will do this as part of the full review into our ongoing businesses that I have launched. The review will ensure that the bank places the needs of our customers at its centre. Reporting back in February, the review will fully and transparently address the issues that you have raised in your report and I am pleased that Oliver Wyman will continue to work with the bank to help deliver on this.

We have already committed to fix our lending processes and we are beginning work to enable all but the most complex lending decisions to be taken in just five days of receipt of all necessary information – this process can currently take weeks and months in some instances.

We also recognise that there are steps we can take now to grow gross lending. This includes writing to thousands more businesses setting out how much more the bank is willing to lend them. We have already offered £4bn this way - this will now increase to £10 bn.

Your report also highlights that when times are tough for our customers, some have said they were angry about the treatment they received. As you say in your report, many are happy with the skills and expertise we provide at times of financial distress, but to ensure our customers can have full confidence in our commitment to them I have asked the law firm, Clifford Chance, to conduct an inquiry into this matter, reporting back to me in the new year. It is important that we get this right, especially as our regulators want the bank to remove problem loans more quickly.

We are the biggest SME lender - now we want to be the best SME bank too. That includes as measured by a new survey on customer satisfaction that we are funding and working with the SME trade bodies on.

Your report provides a road map for making RBS a better business bank. I am grateful to you and your team.

Yours sincerely,

Ross McEwan

Group Chief Executive

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