PwC to investigate RBS directors over rights issue

| May 18, 2009 | 0 Comments
PwC to investigate RBS directors over rights issue

According to The Sunday Telegraph, the Financial Services Authority (FSA) has asked PricewaterhouseCoopers (PwC) to conduct an inquiry into the board of directors at Royal Bank of Scotland (RBS) with regard to the £12 billion rights issue carried out last year.

The investigation will examine the bank’s risk management process and establish whether the stock market was properly informed about the bank’s financial position in the build up to its record breaking fundraising exercise, carried out in the spring of 2008.

Directors of RBS, which is now 70% owned by the taxpayer, will also be under scrutiny for their attitude to risk at the time of RBS near collapse.

Sir Fred Goodwin, former chief executive of RBS, along with former RBS chairman, Sir Tom McKillop, were both subject to shareholder scrutiny after the rights issue. Both directors have since departed ways with the bank following pressure from shareholders.

Meanwhile, Michael Lamoureux, founder the RBS shareholder action group, recently said of the £12 billion rights issue that shareholders had been “grossly misled in the prospectus” and were being contacted about taking a class action against the bank.

Mr Lamoureux, told the BBC that “the bank perpetrated the biggest crime in financial history in the UK” via the rights issue.

The FSA and RBS have both declined to comment on the inquiry.

In related news, shares in Lloyd Banking Group increased 6% this morning to 94.75p on the news that chairman Sir Victor Blank is to step down.

Sir Victor, along with chief executive, Eric Daniels, have both faced criticism from shareholders following the hasty takeover of HBOS. Many believe Mr Daniels‘ position could now be ‘in doubt‘.

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