No one will be scared of the watchdog again if it keeps dithering over RBS

Outlook

RBS’s chief executive warned two years ago that the bank’s IT was urgently in need of an upgrade (Corbis)

If procrastination were an Olympic sport, the UK’s financial watchdogs would be on course for gold in Rio.

The recent report on the failure of HBOS only saw the light of day after two years of delays. Now we learn that another report that was supposed to have been wrapped up by now, this time on the treatment of financially strained business customers by Royal Bank of Scotland, will be held up until an unspecified date next year.

What on earth is going on? First a bit of background. Under RBS’s old boss Fred Goodwin, struggling companies that borrowed from the bank were handed over to a division called Global Restructuring Group (GRG). Run by a man called Derek Sach, who had made his name in private equity, the unit was once feted for taking a new approach that allowed RBS to use it as a profit centre for the bank.

But its activities led to some incendiary allegations, namely that perfectly viable companies were being pushed over to GRG before being broken up for their assets, which were then sold. These claims were tabled in a report penned by the government adviser Lawrence Tomlinson.

Another report, by Sir Andrew Large, a former deputy governor of the Bank of England, didn’t find any evidence to back the worst of the allegations up (it was commissioned by RBS). But he subsequently told the Treasury Committee that they were outside the scope of his investigations, which looked into the way small businesses were treated by the bank.

Sir Andrew described the allegations as “extreme”. But he also said they were “plausible” because of GRG’s “flawed” structure. As a result he called for a forensic review of the work of GRG. It is this review, commissioned by the Financial Conduct Authority, that we are still waiting for.

Now let’s be fair to the FCA. This is a difficult case from a regulatory standpoint because it concerns an unregulated commercial loans business. To take action against GRG, or any of the people involved in it, the accountants and management consultants hired to do the job would first have to unearth evidence of sharp practice. The regulator and its lawyers would then have to find a creative way to prosecute that wrongdoing – one capable of getting through its Regulatory Decisions Committee and (perhaps) an appeals tribunal.

But this has been done before. Libor interest rates and foreign exchange trading were also unregulated – and the FCA found a way to punish the banks whose traders rigged the markets all the same, ruling that they had breached its principles of business. Faced with a global scandal, said banks all agreed to assume the position.

RBS might not be so keen in this case because it would open a Pandora’s box of legal claims. Any individuals lined up for sanction would almost certainly fight. But if there is to be a battle, it is receding further and further into the distance.

What this latest delay has done is to create a rod for the FCA’s back. The accountancy firm Mazars and consultancy Promontory Financial Group were commissioned to do the work nearly two years ago. It will reflect very poorly on the FCA if, after all that time, effort and fees, they come up empty-handed. Its credibility is at stake and the longer this one sits in the long grass, the worse it is going to get.

AstraZeneca lines up the mother of all hangovers

The drug giant AstraZeneca is starting to make the people who indulged in fisticuffs over flatscreen TVs during last year’s Black Friday shopping splurge look restrained.

A day after bringing home a $575m (£385m) stocking filler in the form of Takeda’s respiratory business, it put a rather pricier pressie under its shareholders’ tree in the form of a majority stake in biotech Acerta Pharma at a cost of up to $4bn. Acerta doesn’t have any products on the market, just a cancer drug that has shown promise and might cause fewer side-effects than those of its main rival.

Pfizer’s one-time prey has turned predator, and aggressively so as boss Pascal Soriot attempts to make good on the promises he made to secure his shareholders’ backing in rebuffing Pfizer.

He is serving as a year-round Santa Claus for biotechs with a bit of potential – and their owners are getting drunk on the money. The hangover? That will be felt by those who have to pay through the nose for these treatments if and when they come to market. That hangover could be brutal.

UK steel gains some respite, but has it all come too late?

Happy days for steel! Yes, really. Business Secretary Sajid Javid is riding to the rescue. He has been on the phone to his new best pal, the European Competition Commissioner Margrethe Vestager. The result is that he is allowed to give the beleaguered industry a rebate on green levies.

Steel making is an energy-intensive industry. That costs here are higher than for rivals in many countries is another nail in the coffin built from a glut of cheap steel being chucked on to the market by China.

So the fact that Mr Javid is allowed to hand out a rebate should not be underestimated. Hundreds of millions of pounds could be saved, providing relief for an industry that is fighting for its life.

But it’s no panacea. The UK industry is still caught between a rock and a very hard place and this may prove too little and too late from a Government that has largely sat on its hands while the furnaces have stopped burning.