The Financial Services Authority (“FSA”) has published its Board’s Report on “The Failure of the Royal Bank of Scotland”. The report describes the errors of judgement and execution made by Royal Bank of Scotland ("RBS") executive management which resulted in its failure. Furthermore, “the report reinforces the conclusion that the global capital standards applied before the crisis were severely deficient and liquidity regulation was totally inadequate”, said Mr Turner, the FSA Chairman, in his forward speech. The Report concludes that six factors contributed to the failure of RBS: (i) significant weaknesses in RBS’s capital position, as a result of management decisions and as permitted by an inadequate regulatory capital framework; (ii) over-reliance on risky short-term wholesale funding; (iii) concerns and uncertainties about RBS’s underlying asset quality, which in turn was subject to little fundamental analysis by the FSA; (iv) substantial losses in credit trading activities, which eroded market confidence. Both RBS’s strategy and the FSA’s supervisory approach underestimated how bad losses associated with structured credit might be; (v) the ABN AMRO acquisition, on which RBS proceeded without appropriate heed to the risks involved and with inadequate due diligence; and (vi) an overall systemic crisis in which the banks in worse relative positions were extremely vulnerable to failure. Therefore, according to the report, RBS’s failure amid the systemic crisis ultimately resulted from poor decisions made by the RBS management and Board, however,  deficiencies in the global capital regime and liquidity regulations made the crisis much more likely. In addition, flaws in the FSA’s supervisory approach provided insufficient challenge to RBS.