RBS warned by Fed over risk management
Federal Reserve tells British bank to improve oversight of its US operations
By CFOWorld.co.uk | CFO UK | Published 17:27, 27 July 11
Royal Bank of Scotland (RBS) was told to improve risk management processes at its American operations by the Federal Reserve on Wednesday.
The group was ordered to deliver a plan outlining how it will enhance “corporate governance, management, risk management and operations” at its US units.
RBS, which is 83 percent owned by British government since its near-collapse during the banking crisis, was given 60 days to submit a written plan explaining its intentions.
The Fed order applies to RBS Group, the holding company, as well as to RBS plc in Edinburgh and its branches in New York, Connecticut and Illinois.
RBS must show how it will improve "effective control over and supervision of the US operations' corporate governance."
RBS must also demonstrate that it will tighten up risk management and comply with requirements set by the Treasury Department's Office of Foreign Assets Control, which monitors potential money laundering activities.
The bank said it was already tackling the issue.
“We set and expect higher standards than those that resulted in this Order. RBS is well advanced in addressing the deficiencies noted by the US banking authorities and in continuing to upgrade our governance and compliance systems throughout the group,” chief executive Stephen Hester said in a statement.
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