Taxpayer backed bank Royal Bank of Scotland has handed bonuses worth £17m to bankers in its restructuring division, despite an ongoing investigation by the City’s watchdog into its treatment of small businesses.

RBS’ global restructuring group (GRG) has been the focus of allegations by Lawrence Tomlinson, a Government adviser, that it forced viable small businesses to the brink so the bank could then buy up the properties and make a profit.

Another report by the former Deputy Governor of the Bank of England, Sir Andrew Large, said that GRG’s “internal profit centre” meant the division could be tempted to drive profits from clients rather than help a turnaround of the business.

An investigation by the law firm Clifford Chance, said in April, that it had found “no evidence” to back up the most serious accusations, after being hired by RBS to examine the claims.

However, the Financial Conduct Authority (FCA) is still investigating the claims.

An RBS spokesman declined to comment on the bonus awarded to GRG staff.

Last week, RBS bosses were branded “wilfully obtuse” for giving misleading evidence to MPs in a committee meeting to answer the allegations about the treatment of small firms.

Andrew Tyrie, chairman of the Treasury Select Committee said that he would write to the bank’s chairman to complain about the evidence given by Chris Sullivan, deputy chief executive of RBS, and Derek Sach, head of the bank’s GRG unit in June.

In June, RBS bosses repeatedly insisted that GRG was not a “profit centre”. RBS “decided to contest the term in evidence to the Committee, not only in a written statement in February, but also repeatedly in its public hearing in June,” Mr Tyrie said.

However, in a letter to Mr Tyrie, Mr Sullivan, who is leaving RBS next year, said he had to “correct the statement he made to the Committee” since he now agreed that GRG was indeed a profit centre.

The Sunday Telegraph also revealed this weekend that the former finance director of RBS stands to make more than $12m (£7m) if the company’s US operation Citizens Bank, is sold before its planned flotation.

News of the potential payout follows a very strong start to the year for RBS, which saw its shares surge more than 10pc on Friday after pre-tax first-half profits for the first half of the year jumped from £1.4bn to £2.6bn.

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