At last. The FSA’s report on the fiasco that was Northern Rock. The executive summary released back in March gave us the shock revelation that a full 129 lever-arch files (or equivalent) were called to action in the effort to get to the bottom of what went wrong.
Now we have the full version – “redacted”, in the FSA’s words, to “protect commercial and individual confidentiality.” And, my my, hasn’t someone been busy with the Tippex.
So there’s the odd intriguing paragraph, such as this regarding the head of department’s engagement with the Rock:
So someone, somewhere had “issues” within the major retail groups division. We think this is all meant to indicate that the department itself was over-stretched.
Wait, there’s more on how the manager engaged with Northern Rock.
Names have been changed to protect the innocent.
There’s also some really good benchmarking charts. The kind of peer benchmarking that might have helped the regulator spot that Northern Rock was overly dependent on the wholesale markets and operating within an inch of its life.
Here we go. Northern Rock had the highest year-on-year growth in gross lending for example:
It also had the lowest cost to income ratio.
This all raises two initial questions. What kind of budget Amstrad chart generator are the folks at the FSA using? And why does the regulator’s Tippexer-in-chief feel the need to blank out publicly available, historical information?
Fast forward to page 62, and this guardian of all things sensitive and commercial has opted to wipe out a chart comparing Northern Rock’s share price performance to the FTSE 100 and FTSE 350 banks index. We’re not allowed to see a chart of Northern Rock’s CDS either.
If the ARROW panel – the name given to the FSA’s risk assessment bods – weren’t demanding publicly available information to look at banks against their peers, you have to wonder what they did spend their time doing. And if the regulator stopped spending time totting up lever arch files and tippexing out share prices, who knows what heights of efficiency and competence it could achieve?
There’s 138 partial pages for you to enjoy.
Related links
Rock handling to keep FSA in the spotlight – Lombard
Staplers to the ready, the FSA gets serious – FT Alphaville, March