Aug. 17 (Bloomberg) -- Royal Bank of Scotland Group Plc, the biggest U.K. bank controlled by the state, is being probed by the Financial Services Authority over its 14.3 billion-euro ($20 billion) takeover of parts of ABN Amro Holding NV.

“In April 2009, the FSA notified the group that it was commencing a supervisory review of the acquisition of ABN Amro in 2007 and the 2008 capital raisings,” the bank said in its first-half results published Aug. 7. “The group and its subsidiaries are cooperating fully with this review.”

Fred Goodwin, RBS’s then chief executive officer, pushed through the purchase of Amsterdam-based ABN Amro Holding with partners Banco Santander SA of Spain and Belgium’s Fortis after global money markets froze in 2007. The acquisition saddled RBS with bad debt, depleted its cash reserves, and led it to report a loss for 2008 of 24 billion pounds, the biggest reported by a U.K. company.

“It is not unusual for the FSA to conduct an investigation if a significant failure has occurred,” said Abi Jones, an FSA spokeswoman in an e-mailed statement. She declined to comment on RBS specifically.

Linda Harper, a spokeswoman for RBS, declined to comment further. The Daily Telegraph reported the investigation earlier today.

Goodwin, who had been CEO since 2000, was ousted last year following a 20 billion-pound state bailout. The government owns 70 percent of the Edinburgh-based bank.

‘Exceptional’

The FSA probe follows a similar investigation into Resolution Ltd.’s founder Clive Cowdery and Chief Executive Officer Mike Biggs. The FSA targeted actions by Resolution Plc, Cowdery’s former buyout company with the same name, between October 2007 and May 2008. Cowdery sold Resolution Plc for 5 billion pounds to Hugh Osmond’s Pearl Group Ltd. Resolution Ltd. said the FSA investigation was concluded in May.

Such an FSA probe “is not done as a matter of course,” said Jonathan McMahon, a former FSA supervisor who now advises companies on financial regulation at Promontory Financial Group Ltd. “It’s exceptional. It happened in the case of the Resolution/Pearl deal, when again there was a question about the content of some statements to the market made by Resolution.”

To contact the reporters on this story: Andrew MacAskill in London at amacaskill@bloomberg.netCaroline Binham in London at cbinham@bloomberg.net

Last Updated: August 17, 2009 11:49 EDT