9th December 2011
Some reports suggest the FSA is to recommend that regulators are given the power to stop bank mergers not just on competition grounds, but also if they have misgivings about any merged organisation's financial stability as trade site IFAonline reports here.
Some might argue that the FSA already had the power to stop the merger back in 2007, but simply failed to understand the state of RBS's finances.
Any power would not rest with the FSA, which is being abolished and replaced with two new regulators the Prudential Regulatory Authority and the Financial Conduct Authority. The PRA is charged with ensuring the stability of the financial system and of big financial firms with the FCA focused on consumer protection.
The former board of RBS led by Sir Fred Goodwin as chief executive were once viewed as merger specialists by the City of London. They had carried out several successful takeovers, in the UK and America, in particular when RBS bought the much larger UK high street bank NatWest. At the time, NatWest was viewed as an underperforming giant. Goodwin drastically cut the workforce earning the nickname Fred the Shred but this propelled him into the big league in the eyes of the stock market.