RBS share price: Watchdog withheld GRG report fearing legal action

FCA feared being sued for ‘unfair treatment’ by bailed-out lender

RBS share price: Watchdog withheld GRG report fearing legal action

The Financial Conduct Authority (FCA) decided not to publish a report on Royal Bank of Scotland Group’s (LON:RBS) controversial restructuring division because it feared being sued for ‘unfair treatment’ by the bank, The Times has revealed. The FTSE 100 group’s Global Restructuring Group (LON:GRG) is at the centre of allegations in a 2013 that the bailed-out lender forced small company clients out of business to acquire their assets on the cheap, which subsequently prompted the FCA investigation.

RBS’ share price has been subdued in London in today’s session, having lost 0.47 percent to 272.90p as of 14:29 GMT. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.09 percent higher at 7,345.24 points.

FCA feared legal action

The Times reported today that while the FCA had acknowledged the public interest in issuing its full investigation into RBS’ GRG division, it had concluded that to do so would expose it to an “unacceptable risk of successful legal action by current/former RBS managers,” according to internal board minutes seen by the newspaper. The City watchdog also discussed the ‘risk’ that if the full document was published it “may raise expectations among smaller banking customers about the prospect of obtaining significant redress or compensation”.

The FCA has been at the centre of a heated political row over its refusal to publish the full report. While three summaries of the findings have been issued, the watchdog has told MPs that publishing the repot in full would not be in the public interest. 

The news comes after the watchdog recently warned RBS’ senior managers that they will be held personally accountable if there is any failure in the bank’s response to the scandal in its restructuring division.

Analysts on RBS

Citigroup reiterated its ‘buy’ rating on RBS last week, without specifying a price target on the stock, while Berenberg Bank continues to see the bailed-out lender as a ‘buy,’ valuing the shares at 300p. According to MarketBeat, RBS currently has a consensus ‘hold’ rating and an average price target of 264.67p. 

As of 14:59 GMT, Tuesday, 05 December, Royal Bank of Scotland Group share price is 271.40p.

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