FSA 'Should Have Stopped' RBS' ABN Takeover
The financial regulator should have blocked Royal Bank of Scotland's (RBS) takeover of its Dutch rival ABN Amro in 2007, according to MPs.
The Financial Services Authority (FSA) was criticised in a report by Parliament's Treasury Select Committee for the part it played in RBS' near-collapse and subsequent £45.5bn bailout by taxpayers.
Following the FSA's failure to intervene in the "calamitous" deal - worth almost £50bn - MPs said banks needed a regulator with the self-confidence to intervene, even if it causes short-term destabilisation.
Their report urged the Government to include an explicit requirement for the regulator to approve major bank acquisitions and mergers in forthcoming legislation - to prevent a repeat of the disastrous deal.
"There is no substitute for the exercise of judgment," the committee's chair, Andrew Tyrie, said.
RBS' demise came after a string of takeovers and aggressive expansion saw it overstretch itself with the ABN deal.
The FSA's inaction throughout the takeover "reflects a grave weakness in the corporate governance of the FSA", the report said.
"It should have intervened at an early stage. It should and could have intervened at a late stage, albeit with more difficulty," it said.
It added: "The FSA's failure to assess the risks of the deal represents a serious misjudgement on the part of the supervisory team and the senior management."
The regulator's own report into RBS was also condemned by the committee, which said its failures "amount to a serious indictment" of bosses at both the bank and the regulator.
The FSA's chairman, Lord Turner, was also criticised for his initial reluctance to publish a full report into RBS.
An spokesman for the regulator said it would "consider the report's findings and recommendations in detail", adding the FSA had put in place "a completely new model of supervision since the financial crisis".
The FSA is being scrapped next year to make way for a new banking supervisory unit at the Bank of England - the Prudential Regulation Authority- and a new watchdog, the Financial Conduct Authority.
what do you think?
Fred Goodwin is a megalomaniac. RBS's demise and bail out was all his fault.
The FSA should be restructured and the current top people dismissed. The FSA is supossed to be over looking and regulating these things. It is so on the fence and laid back in its actions some of use wonder if they are awake and on this planet. They are a waste of public money which could be better used to regulate and over see these financial dealings.
You are quite correct in your comment. The FSA and all reulators require people that understand how business works, and that is not the case at the moment. In my view they need to attract the right people because they are not paying as well as the banks or other financial institutions so the best don't work for a regulator. We have had about 60 bank crises since the end of the 1700's or there abouts.
..FSA.......HAVE NO TEETH......AND HAVE BEEN A TOTAL WASTE OF OUR MONEY.!