Ex-minister's anger as FSA clears Royal Bank bosses

THE conclusion of the City watchdog that there was no failure of governance at the Royal Bank of Scotland "stretches credulity", ex-City minister Lord Myners has said.

The Labour peer said yesterday there had been a "lamentable failure of leadership at the bank".

Last week the Financial Services Authority ruled out action against former bosses at RBS after finding no evidence of fraud or dishonest activity in the lead-up to the financial crisis.

In its investigation into the bailed-out bank, the FSA said RBS made a series of bad decisions in the years immediately before the financial crisis, most significantly the acquisition of Dutch bank ABN AMRO and aggressively expanding its investment banking business.

But it added that these bad decisions were not the result of a lack of integrity by any individual and did not identify "any instances of fraud or dishonest activity by RBS senior individuals or a failure of governance on the part of the board".

Lord Myners said at Question Time in the House of Lords yesterday: "It stretches credulity that the FSA could conclude that there was no governance failure at the Royal Bank of Scotland.

"From my perspective as a minister, there was a lamentable failure of leadership, proper inquiry and proper governance in the Royal Bank of Scotland."

Treasury minister Lord Sassoon said he had seen only the conclusions of the report as the FSA could not publish the full report as it contains "confidential material".

Tory Baroness Oppenheim-Barnes asked: "Would you agree with the view that has been expressed by some people that the Royal Bank of Scotland and the FSA are covering for each other?" Lord Sassoon replied: "I could not say that."