Mortgage News
FSA paid £7.6m for secret RBS report
An analysis the FSA ordered from PwC into what went wrong at RBS cost more than £7.6m, according to a Freeedom of Information (FOI) request.
The City watchdog did not pay the fees in their entirety, but imposed a “special levy” on the bank of more than £4.7m for extra regulation costs after RBS received a £45bn capital injection from the taxpayer, the Guardian reports.
Despite such hefty fees, the FSA has admitted it does not have a report it can publish into the events that brought RBS to the brink of collapse in October 2008.
The FSA announced last month that “bad” decisions, not dishonesty, were to blame.
At first the watchdog refused to give details on why no disciplinary action would be taken against any of the individuals involved, including former RBS CEO Sir Fred Goodwin.
But after a fortnight of political pressure, FSA chairman Lord Turner has agreed to publish a report in March into the problems at the bank.
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The FSA commissioned PwC to look at operations at RBS including the takeover of Dutch bank ABN Amro as the credit crunch was beginning in late 2007. The deal left the enlarged bank with wafer-thin capital ratios.
PwC also looked at rights issues by the bank in 2008 that were required to bolster its capital as a result of the Dutch takeover.
It also scrutinised the “conduct, systems and controls” of the investment bank at RBS.
The FSA defended the cost of the work conducted by PwC on the basis that a “complex” set of investigations were essential.
An FOI request to the FSA into the fee paid to PwC for its work led to the regulator disclosing that “the fee so far paid to PwC for its work on the review into RBS was £7,643,386 (including VAT)”.
“We expect to receive a final invoice for approximately £55,000 (excluding VAT) in January 2011,” the FSA added.
RBS declined to comment, the Guardian reports.