London: Incoming Royal Bank of Scotland (RBS) chairman Howard Davies has defended his role in setting up the financial regulator that presided over the near meltdown of Britain’s banking system.
Davies was a surprise appointment to succeed Philip Hampton as chairman of state-controlled RBS after the Financial Services Authority (FSA) he set up in the 1990s was widely criticised for inadequate supervision of banks in the run-up to the 2007-9 financial crisis. The FSA was subsequently disbanded.
Davies told Reuters the FSA was not a “light-touch” regulator and was not to blame for the failure of banks such as RBS, which cost taxpayers £45 billion ($67 billion,Dh246 billion) to rescue.
“The big problem during the crisis was that banks didn’t have enough capital. It had nothing to do with light-touch regulation,” he said.
International standards
“There’s no sense in which the FSA was ever a light-touch regulator in capital terms. It implemented internationally-agreed capital standards,” he added.
“No one has ever demonstrated that there was any kind of blind eye turned to capital requirements.”
Davies, a former deputy governor of the Bank of England, set up the FSA in 1997 and ran it until 2003. He will take over as RBS chairman in September.
