LONDON, March 26, 2008 (AFP) – Britain’s top financial services regulator admitted Wednesday to serious failings in its oversight of Northern Rock, the British bank that needed a government bailout to save it from collapse last year. The Financial Services Authority (FSA), responsible for regulating London’s City financial district, said in a statement on Wednesday that an internal review had exposed a series of mistakes in the run-up to the fiasco.
Northern Rock lurched into crisis in August, when it sought emergency central bank funds because of the credit squeeze, and was taken into public hands last month after the government could not find a private sector buyer.
The internal FSA review found that regulation of the bank “was not carried out to a standard that is acceptable” and had failed to monitor Northern Rock’s risk management closely enough.
The FSA vowed to overhaul its oversight of Britain’s main commercial banks, with closer and improved supervision that would be regularly reviewed and would focus on liquidity requirements.
Northern Rock was brought to the brink of collapse when it could not raise funds on credit markets to cover its liabilities and depositors beseiged the retail bank’s branches in Sep