RBS fined for reporting flaws worsened by ABN Amro deal
LONDON (Reuters) - Britain's Financial Conduct Authority has fined Royal Bank of Scotland 5.6 million pounds ($8.6 million) for failing to report transactions the watchdog needs to help it spot market abuses.
The FCA said problems with the bank's systems were aggravated by its disastrous takeover of Dutch bank ABN Amro in 2007. RBS was bailed out the following year by the British government, which holds an 81 percent stake in it.
The FCA said on Wednesday the bank failed to properly report 44.8 million transactions between November 2007 and February 2013, and failed altogether to report 804,000 transactions between November 2007 and February 2012. The breach represents just over a third of relevant transactions over these periods.
Following the ABN Amro takeover, RBS ended up with 38 transaction recording systems and began addressing the "pervasive" failings in late 2009.
"Effective market surveillance depends on accurate and timely reporting of transactions," FCA director of enforcement Tracey McDermott said in a statement.
The FCA said it will not only impose fines on firms that breach reporting rules but also make them pay the cost of resubmitting historically incorrect reports.
"These failures are particularly concerning because the FCA already provides extensive guidance to firms on how to submit and check these reports," McDermott said.
RBS said it fully cooperated with the regulator throughout the investigation.
"We regret the failings that were uncovered and have subsequently made significant investments to our systems and controls in this area," a spokeswoman for the bank said.
The UK watchdog and its predecessor, the Financial Services Authority, have already take action against seven firms for reporting failures, including Barclays and Credit Suisse .
RBS agreed to settle at an early stage of the investigation, and received a 30 percent reduction in its fine.
Most of the bank's errors involved assigning an incorrect reference code to trades, making it impossible for the watchdog to identify who was behind each trade. ($1 = 0.6508 British pounds)