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UK regulator reviews RBS purchase of ABN Amro

Source: Reuters - Mon 17th Aug 2009

Britain's financial regulator has launched a supervisory review of Royal Bank of Scotland's takeover of ABN Amro, the Scottish bank said on Sunday.

The Financial Services Authority (FSA) told RBS in April it would carry out the review, the bank said in a note in its half-year results.

"In April 2009 the FSA notified the group that it was commencing a supervisory review of the acquisition of ABN AMROin 2007 and the 2008 capital raising" the note said.

RBS said "the group and its subsidiaries are co-operating fully with this review."

The bank led a European consortium that also included Santander and Fortis to buy Dutch bank ABN AMRO for 70 billion euros in October 2007, outgunning Barclays to land the deal by paying a higher price mostly in cash.

RBS paid about 10 billion pounds for its portion, mainly investment banking business.

The consortium was criticised for not cutting its offer as the financial crisis began before the deal was sealed.

RBS, which became financially stretched by the deal, was forced to surrender a majority stake to the government in return for a 20 billion pound taxpayer-funded bailout last year after it was hit by spiralling losses on risky credit-backedassets.

The Daily Telegraph said the review would look into the "whys and wherefores" of RBS' battle with Barclays and what due diligence was performed. 

No further details were available. The FSA would not comment.

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