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FSA wants power to block hostile bank takeovers

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FSA chairman Lord Adair Turner may ask the Government for the power to block hostile takeovers in the banking sector to prevent aggressive takeovers from disrupting financial stability.

In an interview with Dow Jones newswires, Turner said “aggressive, contested” takeovers do not allow for as much due diligence as agreed takeovers, adding it might be an acceptable risk in non-banking sectors but not in the financial sector.

He says: “Whereas you can see the primary responsibility of the board of directors of a non-banking company being to maximise shareholder value and to take risks, the fact is that for banks the downside to a society of getting it wrong is a hugely important factor.”

Turner said he could make the request when the FSA publishes a synthesis report on its investigation in Royal Bank of Scotland and the events that led to its bailout, which he said would be by April.

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There are 5 comments at the moment, we would love to hear your opinion too.

  1. He also said in the same interview when refering to the RBS takeover of ABN Amro and whether it should have been blocked or reviewed “It is true to say that philosophically back in 2007 we didn’t think it was our role as a regulator, but I think maybe we’ve changed”
    What then, did he think the role of a regulator was, and if he doesn’t even know what his job role involves what hope for the rest of us??

  2. The correct action would be for the British Government to Represent the interest of the British people by writting the necessary Law that will enable the Courts to review every occassion.

    To pass such authority to an organisation with a history of failure, makes no sense whatsoever.

  3. Lord Turner takes the popular current buzz word ‘Risk to his own’.

    The biggest risk to the Financial Services Industry and Banks is the very high risk of Regulators getting it wrong.

    There is no room for ‘ Sorry I got it wrong or it was not me guv’ but lessons will be learnt mindset.

    One chance only and out, no bonus or golden goodbye, Your fired goodbye is more than suitable

  4. Yet more power without responsibility.
    Why doesn’t the Government do the honest thing and just Nationalise the whole of the Financial Sector – we are run a the whim of the FSA anyway

  5. What will be the point of the FSA being granted extra powers such as this if their implementation will be hobbled by an instruction from the Treasury just to stand back and look in an alternative direction? That’s what happened when the banks were buying colossal packages of CDO’s without due diligence and lending recklessly to all and sundry. The FSA was effectively rendered powerless to intervene. Why would things be any different if the FSA had the power to intervene in hostile takeovers? And anyway, pretty soon the regulation of banks is going to be handed over to a different regulatory body, so why does Adair Turner want it for the FSA at this stage in the game? Would it not be better if the FSA were instead to concentrate on exercising properly (and fairly and proportionately) its current responsibilities?

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