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Rbs Crisis: Fsa Misjudged How Much Help Banks Needed

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Just days before the rescue, FSA officials, under chief executive Hector Sants, believed the most the banking system would require in emergency equity was £20bn and insisted that their problems were to do with a lack of liquidity rather than low levels of loss-bearing capital. In fact by the time the crisis was over, the total equity raised by the banking sector came to around £100bn.

The City watchdog’s failure to identify the key cause of the financial crisis was the culmination of more than a year’s lax governance of banks’ capital levels, and raises questions about Mr Sants, who had been FSA chief executive for 15 months before the bailouts and is due to become a deputy governor of the Bank of England in charge of financial regulation.

The Daily Telegraph’s investigation has also uncovered the scale of the tensions between the Bank and the FSA in the build-up to the crisis. In the week of the rescue, while the FSA was claiming £20bn would be enough, the Bank was arguing for a recapitalisation of £75bn-£100bn. The FSA’s stance is said to have infuriated the Bank.


RBS’s collapse was in large part due to billions of pounds being withdrawn by large companies. However, one former manager said the regulator had never required it to stress-test its business for such an eventuality.

Still at least Hector Sants has been promoted to Deputy BoE governor, can't let quality like that escape the system.

Highly skilled people at the FSA.

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I would just propose that the regulator is supposed to know what is going on.

There should be no need for a report...other than as to why these FSA bods are still in jobs, indeed their finances sequestered for failing to carry out their duties, and claiming bonuses all the while.

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Wonder how many highly competent FSA staff move over to the banking sector when the FSA gets shut down?

The FSA's job is going to the BoE. So Sants is going with it. Simple, right?

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  • 312 Brexit, House prices and Summer 2020

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