By Rupert Hargreaves – Tuesday, 25 November, 2014
Whenever you make an investment, you are placing a huge amount of trust in the company’s management. So it’s key that management, and the company as a whole, demonstrate that they can be trusted without misleading investors. Royal Bank of Scotland (LSE: RBS) (NYSE: RBS.US) has a history of misleading investors but up until last week, many analysts and investors alike had started to believe that the company was changing for the better.
Unfortunately, RBS showed once again last week that it can’t be trusted after the bank revealed that it had made a major error in its reported capital strength in the recent European stress tests.
RBS announced at the end of last week that it had incorrectly calculated its core tier one ratio, under the simulated European Banking Authority’s three-year period of stress. The original figures suggested that the bank’s tier one ratio would fall to 6.7% by 2016, in an adverse situation.