Summary
As and when the FSA is abolished by the next Conservative government, who are likely to win the next election, the only people who will mourn its passing will be those in the financial services industry whose interests it has protected since its creation.
Analysis
I recently noted (see Royal Bank of Scotland Under Investigation ) that the beleaguered Royal Bank of Scotland (RBS) now faces further humiliation and further potential value destruction, as the Financial Services Authority (FSA) investigates RBS's ill fated acquisition of ABN Amro, and the subsequent £12BN rights issue.
However, it seems that if the FSA is true to its word about spot checking bankers' pay contracts to ensure that they comply with the FSA's new code on pay then RBS (as a result of the remuneration of its new hirings) may have exposed itself to further humiliation:
The Times reports:
"Royal Bank of Scotland (RBS), which is 70 per cent-owned by the British taxpayer, revealed this week that it had awarded a bonus worth £2.3 million to Brian Hartzer, a new executive, including £1 million just to stay with the company for two years.
RBS has also spent more than £10 million on hiring two bankers. Antonio Polverino, a star banker from Merrill Lynch, is on a £7 million one-year package while Bruce Van Saun, the bank’s new finance director, is joining from Bank of New York Mellon next month on a multimillion-pound salary."
Whether the FSA spot checks RBS, or indeed any other bank, the question is do the banks and other financial services organisations in the UK actually care what the FSA says or does?
The FSA, having been set up as part of Gordon Brown's failed Tripartite Regulatory System (who is actually in charge of that; the Treasury, Bank of England or FSA?), has not covered itself in glory.
During the FSA's existence the British economy has endured ao:
- the ongoing endowment mortgage scandal
- PPI mis-selling
- excess credit card interest rates
- excess bank overdraft charges
- profiteering mortgage default charges
- the collapse of Northern Rock
- wanton value destruction at RBS, Lloyds Banking Group and Halifax Bank of Scotland (HBOS)
- the near collapse of the banking system
- the ongoing credit crunch
- the Ponzi scheme of subprime toxic debt sales and resales, masterminded by US banks and foisted onto a gullible greedy banking sector in the UK
A record that speaks for itself, and one that lends itself to the view that the financial services industry in the UK does not care one jot what the FSA does or says.
As and when the FSA is abolished by the next Conservative government, who are likely to win the next election, the only people who will mourn its passing will be those in the financial services industry whose interests it has protected since its creation.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
