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Poor management blamed for failure of Royal Bank of Scotland in 2008

(Xinhua)

21:58, December 12, 2011

LONDON, Dec. 12 (Xinhua) -- Britain's Financial Service Authority (FSA), the financial regulator for Britain, published a report on Monday, pointing to poor decision by its management and board as cause of the failure of the Royal Bank of Scotland (RBS) in 2008.

FSA attributed the bank's failure to six factors including significant weaknesses in capital position, over-reliance on risky short-term wholesale funding, concerns and uncertainties about the underlying asset quality and substantial losses in credit trading activities.

The report said that RBS had too weak a capital position to proceed with the takeover of parts of the Dutch bank ABN Amro. The 49 billion pounds purchase took place at the height of the financial crisis in 2007.

At the same time, FSA admitted that the regulation and supervision of banks was "deficient" and "flawed."

The report said FSA was too focused on conduct regulation at the time and its prudential supervision of major banks was inadequate.

At the time when RBS was on the verge of collapse in 2008, the taxpayers had to rescue bank by injecting 45.5 billion pounds into it. RBS is now 83 percent owned by the British government.

 
 
 
 
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