This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.
X
MM+cover+small+180914
Categories:Politics,Regulation

MP backs probe into RBS accounting methods

  • Print
  • Comments (2)

Conservative MP Steve Baker has backed calls for Royal Bank of Scotland to explain its accounting methods after discrepancies emerged concerning the bank’s capital position.

Cobden Partners, an advice service for governments dealing with banking crises, says the asset protection scheme’s 2009/10 accounts show that the APS insures £282bn of the bank’s £1.4tn-worth of assets. Its expec-ted loss on that £282bn is £57bn.

But RBS’s own accounts for the 12 months to December 31, 2010, show a deduction from capital in respect of expected losses on the entire £1.4tn of assets of just £32bn - a difference of £25bn.

Cobden Partners founder Gordon Kerr has written to RBS, raising concerns about the implications of the internat-ional financial reporting standards, which RBS adheres to.

He says the IFRS’s “backwardlooking model” means RBS has not taken into account money it could lose on impaired loans in future, leading to an underestimation of exposure and inadequate core tier one capital reserves.

Wycombe MP Baker, who has backed the letter, says: “The RBS predicament is just one example of the confusion the IFRS seems to produce. It concerns not one bank but the whole system of bank accounting.”

An RBS spokesman says: “RBS is fully compliant with IFRS.”

In January, Baker brought forward a private member’s bill which intends to see banks ret-urn to generally accepted acc-ounting principles, which take into account future possible losses. The principles were in place before the IFRS rules were introduced in 2005 and the bill intends to see the two standards used alongside each other.

Baker says: “We all deserve the right to read a true and fair view of the financial position of banks.”

  • Print
  • Comments (2)

Daily Email Updates
If you enjoyed this article, sign up to receive the latest news and analysis from Money Marketing.

The Money Marketing CPD Centre
Build your annual CPD - you can log and plan your CPD hours for free with The Money Marketing CPD Centre.

Taxbriefs Advantage
Advantage is a digital reference source giving unbiased, independent, answers to your technical queries. Subscribe to Taxbriefs Advantage.

Readers' comments (2)

  • What, if any, concerns did the FSA have about RBS' accounting methods? Were these explored in the FSA's report on the collapse of RBS?

    Unsuitable or offensive? Report this comment

  • Julian ... That is not the only question that arises, as this article (and others) in the Telegraph seek to uncover.

    Article Title:

    How the report into RBS is becoming a report into the FSA

    Link:

    http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8543800/How-the-report-into-RBS-is-becoming-a-report-into-the-FSA.html

    Unsuitable or offensive? Report this comment

Have your sayEdit my profile/screen name

You must sign in to make a comment

Fund Data

Editor's Pick



Poll

Do you think the industry is ready to deliver Budget guidance?

Job of the week

Latest jobs

View all jobs

Most recent comments

View more comments