Independent experts take control of RBS

LONDON: Two senior corporate governance experts are free to start a fresh round of interviews to get to the bottom of the costly implosion of Royal Bank of Scotland if not satisfied with the UK regulator's account.

A cross-party committee of top politicians said on Wednesday former banker David Walker and lawyer Bill Knight, appointed to oversee the planned public account, might extend the research already undertaken by the Financial Services Authority (FSA).

"The reviewers may wish to consider evidence, written or oral, from others not hitherto consulted by the FSA," the Treasury Select Committee (TSC) said.

The failure of RBS in 2008, a year after UK lender Northern Rock buckled under the first bank run in more than 150 years, was averted only by a 45 billion pound ($73 billion) taxpayer bailout and billions more spent on state-backed loans.

British parliamentarians have been at loggerheads with the FSA since the regulator last December closed its investigation into RBS without bringing charges against the bank or senior executives. It blamed "bad decisions" for the near collapse, adding it was legally hampered from publishing its findings.

But TSC Chairman Andrew Tyrie's demands for a public account into failings at both RBS and the FSA to prove that regulatory lessons had been learnt eventually forced the FSA to agree to publish an account of its investigation and allow Walker and Knight to oversee the process.

"The public has not yet had an adequate explanation of the reasons for RBS's failure," said Tyrie said. "They are owed it," he added.

"Billions of pounds of taxpayers' money has been put at risk ... We also need to know what the FSA were doing at the time of RBS's failure and what they have subsequently done to get to the bottom of it."

The TSC said the FSA, which is funded by the financial industry, would provide the experts with "reasonable resources" to oversee the review.

These costs could include legal representation in any proceedings in which Walker and Knight is involved either as defendants or plaintiffs linked to the review of the now 83 percent state-owned RBS.

Walker, commissioned two years ago to run an inquiry into bank corporate governance, and Knight, a lawyer who heads corporate reporting standards watchdog the Financial Reporting Council, will provide the TSC with their own report.

They will highlight where their work has led to significant alterations in the FSA's own account and also where suggested alterations have been ignored. Their report will be published alongside the FSA's account in a few months, Tyrie has said.

But they will not express any legal opinion about the FSA's decision last year not to bring enforcement actions against RBS or its top management, including controversial former chief executive Fred Goodwin, the TSC noted.

In essence, their job is to ensure that the FSA's final account of what went at wrong at RBS during the height of the credit crises is a fair and balanced summary of the evidence gathered by the FSA and accountants PricewaterhouseCoopers.

Copyright Reuters, 2011