British watchdog to publish more details on RBS collapse

15th December 2010, Comments 0 comments

Britain's financial sector watchdog on Wednesday said it would publish more details of its report into the collapse of bailed-out lender Royal Bank of Scotland, caving into government pressure.

The Financial Services Authority (FSA) had revealed its initial findings earlier this month, but faced criticism after refusing to issue more details about why RBS needed a state rescue at the height of the financial crisis.

Initial findings showed the FSA found no evidence of fraud by former bosses of state-rescued Royal Bank of Scotland, ahead of the global financial crisis which crippled the lender in 2008. It is now 80-percent owned by the state.

FSA Chairman Adair Turner on Wednesday said more details would be published by March, after he was summoned for talks with Business Secretary Vince Cable.

In a letter to parliament, Turner said the FSA would provide a clear description of its major findings but stressed it would not publish a "blow-by-blow account".

The FSA chief admitted that it was "extremely unsatisfactory" that his organisation had so far been unable to give a public account.

"We do not believe it appropriate to publish these in full, but now propose that we ask RBS whether it is willing to give its permission for the FSA to use the information gathered as a key input to the development of a report," he said.

"We do not envisage a detailed blow-by-blow account, but a clear description of any key failings, whether related to FSA supervisory processes or to the decisions made by the board and executives of the bank."

A spokesman for Cable said the minister was "keen" for the regulator to publish more details.

"He (Cable) has previously said this should be in the public domain," the spokesman said.

"He recognises there are constraints, but he is keen for as much as possible of it to be made public."

The FSA had said on December 2 that the watchdog's findings "confirmed that RBS made a series of bad decisions" in the run-up to the 2008 crisis but stressed they "were not the result of a lack of integrity by any individual".

One of those investigated was former chief executive Fred Goodwin, who in 2008 led the bank to Britain's biggest annual corporate loss at more than 24 billion pounds (37.2 billion dollars, 28.6 billion euros).

The FSA had also said that its initial "review confirmed that RBS made a series of bad decisions in the years immediately before the financial crisis, most significantly the acquisition of (Dutch bank) ABN Amro and the decision to aggressively expand its investment banking business.

"However, the review concluded that these bad decisions were not the result of a lack of integrity by any individual and we did not identify any instances of fraud or dishonest activity by RBS senior individuals or a failure of governance on the part of the Board," it added.

The troubles at RBS led to a boardroom shake-up with Stephen Hester replacing the disgraced Goodwin.

© 2010 AFP

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