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RBS Fined $8.6 Million in U.K. Over Trade Reporting Failures

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RBS Fined $8.6 Million by FCA for Failing to Report Transactions
Royal Bank of Scotland Group Plc earned a 30 percent discount on its fine for cooperating with the regulator at an early stage in the investigation. Photographer: Chris Ratcliffe/Bloomberg

July 24 (Bloomberg) -- Royal Bank of Scotland Group Plc, Britain’s biggest government-owned lender, was fined 5.6 million pounds ($8.6 million) for incorrectly reporting wholesale trades for six years.

The bank failed to properly report about 37 percent of the total number of trades, which included over-the-counter derivatives transactions, from 2007 through 2013, the Financial Conduct Authority said in a statement on its website today. RBS broke reporting rules on 44.8 million deals, and completely failed to report another 804,000, the regulator said.

“We have set out clear guidance on transaction reporting, backed up by extensive market monitoring, and we expect firms to get it right,” Tracey McDermott, director of enforcement and financial crime at the FCA, said in the statement. “As well as a financial penalty, firms can expect to incur the cost of resubmitting historically incorrect reports.”

Global regulators have sought to bolster oversight of the swaps market after largely unregulated trades helped fuel the 2008 credit crisis and led to the rescue of American International Group Inc., a U.S.-based insurer that booked large amounts of swaps trades in Europe.

ABN Takeover

The rule breach was the result of a problem with the bank’s systems and controls, which “were compounded by the takeover of ABN Amro Bank NV in October 2007,” the FCA said.

“The FCA considers that, given the considerable resources available to RBS, it should have been able to overcome these challenges and ensure adequate systems and controls were in place,” the watchdog said.

The Edinburgh-based lender earned a 30 percent discount on its fine for cooperating with the regulator at an early stage in the investigation.

“We regret the failings that were uncovered and have subsequently made significant investments to our systems and controls in this area,” Sarah Small, an RBS spokeswoman, said in an e-mailed statement.

RBS shares advanced 1.2 percent at 339.90 pence as of 11:52 a.m. in London trading today.

To contact the reporter on this story: Ben Moshinsky in Brussels at bmoshinsky@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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