RBS 2014 Annual Report Download - page 117

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115
RBS – Interim Results 2015
Notes
16. Litigation, investigations and reviews (continued)
FCA Wholesale Sector Competition Review
On 9 July 2014, the FCA launched a review of competition in the wholesale sector to identify any areas
which may merit further investigation through an in-depth market study.
The initial review was an exploratory exercise and focused primarily on competition in wholesale securities
and investment markets, and related activities such as corporate banking. It commenced with a three month
consultation exercise, including a call for inputs from stakeholders. Following this consultation period, the
FCA published its feedback statement on 19 February 2015 which announced that the FCA is to undertake a
market study into investment and corporate banking and potentially into asset management (the latter to
launch late 2015 if undertaken). The terms of reference for the investment and corporate banking market
study were published on 22 May 2015. The FCA is intending to publish an interim report towards the end of
2015/early 2016 with a final report in Spring 2016. At this stage, as there remains considerable uncertainty
around the outcome of these reviews it is not practicable reliably to estimate the aggregate impact, if any, on
RBS which may be material.
Credit default swaps (CDS) investigation
RBS is a party to the EC’s antitrust investigation into the CDS information market. RBS has received and
responded to a Statement of Objections from the EC and continues to co-operate fully with the EC's ongoing
investigation. In general terms, the EC has raised concerns that a number of banks, Markit and ISDA may
have jointly prevented exchanges from entering the CDS market. At this stage, as there remains
considerable uncertainty around the outcome of these reviews it is not practicable reliably to estimate the
aggregate impact, if any, on RBS which may be material.
Loan securitisation business investigations
In the United States, RBS is involved in reviews, investigations and proceedings (both formal and informal)
by federal and state governmental law enforcement and other agencies and self-regulatory organisations,
including the DOJ and various other members of the RMBS Working Group of the Financial Fraud
Enforcement Task Force (including several state attorneys general), relating to, among other things,
issuance, underwriting and trading in mortgage-backed securities, collateralised debt obligations (CDOs),
collateralised loan obligations (CLOs) and synthetic products. In connection with these inquiries, Group
companies have received requests for information and subpoenas seeking information about, among other
things, the structuring of CDOs, financing to loan originators, purchase of whole loans, sponsorship and
underwriting of securitisations, due diligence, representations and warranties, communications with ratings
agencies, disclosure to investors, document deficiencies, trading activities and practices and repurchase
requests.