No former heads of RBS will face criminal charges over the company’s near total collapse which cost the taxpayer £45bn to bailout amid the financial crisis.
The Crown Counsel decided there was “insufficient evidence” of criminal conduct either in relation to RBS or any directors or other senior management involved in the case.
The verdict ends a five-year investigation by the Crown Office which looked into the sale of the bank’s shares in the months before it had to be rescued by the UK government in 2008.
The investigation focused on the rights issue, where existing shareholders were invited to purchase new shares between April and June 2008, and considered whether there was any evidence of criminal conduct.
In 2011, the Financial Conduct Authority’s predecessor the Financial Services Authority published a report into the bank’s failure.
According to the report, RBS had thin capital ratios, putting it in a weak position to absorb losses.
It was also found to have developed a risky liquidity position which was heavily reliant on funding from short-term wholesale markets.
After the report was published, Mark Hoban, who was financial secretary to the Treasury at the time, criticised the regulator and claimed the report listed the “catalogue of management and regulatory failures that almost felled one of the world’s largest banks”.
A statement from the Crown Office published yesterday (12 May) said the “extremely complex investigation” included the examination of over 160,000 documents by a team of specialist forensic accountants and banking experts, supervised by the Serious and Organised Crime Division.
“The investigation involved close co-operation with a range of financial regulators and banking institutions, including the Financial Conduct Authority, the Prudential Regulation Authority, the Federal Reserve Bank of New York, the Serious Fraud Office and the Financial Reporting Council,” the statement added.
“Following careful examination of all the evidence seen to date, Crown Counsel have decided that there is insufficient evidence in law of criminal conduct either in relation to RBS as an institution or any directors or other senior management involved in the rights issue.”
Tony Catt, compliance officer at Anthony Catt Limited, said: “I am not surprised no actual criminal activity was identified.
“It is more a case of incompetence and over-stretching the business, rather than any attempt to defraud people in the rights issue. If the growth plans had been as successful as the directors had hoped, the shareholders would have got good returns on their investments.
“The lack of due diligence and over-optimistic projections led to the collapse,” he said, adding however it’s unlikely the truth of what really happened will ever be uncovered.
katherine.denham@ft.com
