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London, London! FSA report fails to dock RBS / ABN Amro management

Though we are not the ones asking for a witch hunt! the next regulations coming from London which has been proactive enough to veto

EDINBURGH, SCOTLAND - MAY 19:  Media gather at...

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the Euro for its Financial services sector could well be on the lines of not allowing failed banks’ Directors from persecution and prosecution. With non European and non UK banks also expected to fall in line with compensation clauses demanding disclosure of senior staff drawing the best pay ( Top 5 non board employees have to be reported)

Seemingly in the case of RBS which folded on buying ABN AMRO and is owned by the government after a $67 bln bailout, the FSA report mentions a catalogue of errors though on two counts it fails with the media. One, it allowed Fred Goodwin, the RBS chair during the time tearly access to the report on which he modified the report with his lawyers’ help to water down words like ‘gambling’ woth investors money etc. Two, according to the FT, the bank’s directors cannot be prosecuted in the current law even for acquiree ABN AMRO whose Directors could easily be blamed for lax underwriting and securitisation practices that led to a big hole in UK Banking

US has been a little prescient in its quest to move on from the crisis, and the best even blame its prescience for the downfall of Lehman in 2008 when it disallowed Barclays takeover of the bankrupt bank. They have already adopted a two tier regulator with the EBA in front of the erstwhile FSA and its ringfencing report was the most critical for the sector’s recovery as a whole.

EDINBURGH, SCOTLAND - APRIL 19:  Protestors fr...

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UK vetoed the European union’s new fiscal treaty allowing the European Court of Justice a veto for crossing budgetary discipline esp as it wanted an exemption for its Financial sector, still a two horse policy with the government and banks together ostensibly while the European model seems to be in trouble and banks bearing the brunt outside UK. Accounting firm PWC worked on the report and counts RBS as its non audit client

The other government owned bank, in which the Treasury owns another 80% and is still losing money, Lloyds’ CEO from Santander is away on sick leave and has been making more losses since 2008 while Northern Rock was sold on its own cash reserves to banking newbie Richard Branson and PE investors

The FSA reports highlights ABN AMRO acquisition as one of the six reasons RBS failed, the bottomline being that weaker banks with reliance on short term funding had no legs to stand on when the crisis happened. Apparently RBS in turn has blamed FSA and the report even Gordon Brown for their light touch regulation. The bank has already cut 27,500 jobs and may well cut another 5,000 jobs as it comes to terms with more losses and redcing capital since its failure in 2008 RBS holds only 2% in Basel II terms and has to ramp up equity if ever to qualify for Basel III dispensation

The 452 page thriller ( in the spirit of UK’s media idiom) is available here current chairman Tom McKillop and Directors were exonerated in the report.


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5 comments on “London, London! FSA report fails to dock RBS / ABN Amro management

  1. Pingback: London, London! Trying a new R for regulation in the UK – Part II >> Empowering the FPC | The Banking and Strategy Initiative

  2. Pingback: London, London! Trying a new R for regulation in the UK – Part I >> Ringfencing Vickers’ new law | The Banking and Strategy Initiative

  3. Peter L. Griffiths
    December 27, 2011

    Fred Goodwin needs to explain why he is not suing Fannie Mae for fraud, particularly since ABN was a holding company of several American banks with connections with Fannie Mae the main issuer of mortgage backed securities.


  4. Pingback: European Banks crisis: RBS, Socgen and StanC complete job cut rigmarole | The Banking and Strategy Initiative

  5. Pingback: London, London! Barclays, Lloyd and RBS threatened with break up | Banking Insight | The Banking and Strategy Initiative

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