The FSA was in denial about the scale of the banking crisis right up to the week of the historic multi-billion-pound bailout in October 2008, an investigation by the Telegraph has found.
Just days before the rescue, FSA officials, under chief executive Hector Sants, believed the most the banking system would require in emergency equity was £20bn and insisted their problems were to do with a lack of liquidity rather than low levels of loss-bearing capital.
In fact by the time the crisis was over, the total equity raised by the banking sector came to around £100bn, writes the Telegraph.
The City watchdog's failure to identify the key cause of the financial crisis was the culmination of more than a year's lax governance of banks' capital levels, and raises questions about Mr Sants, who had been FSA chief executive for 15 months before the bailouts and is due to become a deputy governor of the Bank of England in charge of financial regulation. Read more
Meanwhile, the Telegraph writes publication of the FSA's highly-anticipated report on Royal Bank of Scotland has been delayed by a month as doubts increase over the thoroughness of the regulator's investigation into the bank's collapse in late 2008.
A report was due to be published this month, but is now not expected to be released until April at the earliest, which is likely to cause concern among politicians, including Chancellor George Osborne, who pushed the FSA to reverse its original decision not to make the documents public.
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From 6 April 2019