In May 2009 the Financial Services Authority (FSA) launched a supervisory investigation into Royal Bank of Scotland Group (RBS), as one of the UK banks that required partial taxpayer bailout support. This work considered if regulatory rules had been broken and what, if any, action was appropriate.
The FSA said: “The review was necessarily extensive and looked specifically at the conduct of senior individuals at the bank, the acquisition of ABN AMRO in 2007 and the 2008 capital raisings.”
The FSA conducted the review with assistance from PWC.
The review confirmed that RBS made a series of bad decisions in the years immediately before the financial crisis, most significantly the acquisition of ABN AMRO and the decision to aggressively expand its investment banking business.
The FSA said: “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.
“The issues we investigated do not warrant us taking any enforcement action, either against the firm or against individuals. However, the competence of RBS individuals can, and will, be taken into account in any future applications made by them to work at FSA regulated firms.”
The FSA’s supervisory investigations into other banks that ‘failed’ during the crisis are ongoing. If they lead to enforcement action being taken then the FSA will make these outcomes public if such actions against individuals or institutions are successful.