RBS, the taxpayer-owned bank, is killing off small businesses to seize assets for its own property empire, according to evidence referred to financial watchdogs by Vince Cable, the business secretary.

The allegations are contained in an explosive report by Lawrence Tomlinson, one of Cable’s key advisers, which will be published tomorrow.

Tomlinson, a businessman drafted into Cable’s department, said yesterday: “RBS has forced vibrant businesses into financial trouble, only to profit from their distress by squeezing them for exorbitant fees and charges and ultimately seizing their assets to swell its own vast property empire.

“By driving healthy companies into the ground, RBS has not only ruined thousands of lives, it has also gravely hindered our economic recovery, compounding the misery of millions of hard-working Britons.”