RBS to 'co-operate fully' over subprime inquiry

Published on Sunday 11 May 2008 21:35

ROYAL Bank of Scotland said yesterday it would "co-operate fully" with an inquiry by the US financial regulator into the bank's exposure to American subprime mortgages, writes Martin Flanagan.

The details of the investigation by the Securities and Exchange Commission, which is one of dozens into the mortgage industry by US regulators since the crisis exploded last August, is in the prospectus for RBS's imminent controversial 12 billion rights issue.

That rights issue is to be put to the vote at a meeting of RBS shareholders at the bank's Edinburgh HQ at Gogarburn on Wednesday.

A bank spokesman said yesterday: "We will co-operate fully with any inquiry. But we cannot say anything more than is in the prospectus." One banking analyst said: "This is an industry-wide thing, given the difficulties financial markets are in. It is not a case of Royal Bank of Scotland being singled out.

"It is obvious that the SEC wants to take a comprehensive look at what went on in the subprime market, given its tremendous ramifications."

The inquiry into RBS was launched in March, and covers the bank's involvement in complex financial securities backed by subprime loans.

It is also looking into residential mortgages written by RBS's US subsidiaries, including the New England-based Citizens.

The investigation follows another, separate, inquiry earlier this year. by the New York attorney-general into RBS's Greenwich Capital offshoot.