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Screenshot of a breaking news alert e-mail from Q2 2017
The bank’s CFO Nathan Bostok resigns after only two months at the job
We all know that something has been terribly wrong with RBS especially when in the aftermath of the financial crisis that erupted in 2008 the UK government had to buy its shares totaling up to £45 billion pounds to prevent it from going under. As it turns out mortgage backed securities were not the only trouble for the bank. Now the UK government majority owned bank has to deal with the shady deals legacy of its purchases.
An investigation into the bank’s business practices between 2002 and 2011 has revealed that RBS conceded information about sanctioned parties (namely from Iran and Sudan) in 3500 transactions valued at about $523 million as reported by the New York Department of Financial Services.
The bank has reached a settlement with the Board of Governors of the Federal Reserve System, the New York Department of Financial Services (DFS) and the Office of foreign Assets Control to the tune of $100 million. The settlement concludes an investigation launched back in 2010 and brings to an end separate criminal probes launched by the US Department of Justice and the District Attorney of New York. The fine will be distributed as follows – $50 million to the FED and $50 million to the DFS.
In order for its clients to gain access to the US Financial System the bank has enacted a procedure that omitted information about the identities of the parties involved to correspondent banks in New York. US dollar payments were routed without mention of the sanctioned country name and names on the Office of Foreign Asset Control’s restricted list. In a stunning revelation instructions were found to be included in RBS’s Business Support Manual
In a separate development the bank’s CFO Nathan Bostok has announced his resignation from the post after only two months spent at the firm. Whether the news have something to do with recent governmental and regulatory scrutiny we don’t know. We definitely know that this departure comes only six months after former CEO Stephen Hester resigned and that the bank is going through a crisis in management.
This story has surfaced on the same day as the FCA has imposed its largest ever fine for retail market activity on Lloyds. The UK government must be proud of its bailout commitments these days as the biggest receivers apparently have the folliest of business practices.