MPs have made calls for the FSA to probe off-balance sheet ‘smokescreens’ in the wake of the capital markets turmoil.

As the bank reporting season drew to a close this week, and RBS faced criticism for the merger accounting of its ABN Amro purchase, the politicians questioned the transparency of the banks’ operations.

‘The FSA should consider whether banks have been using these off-balance sheet vehicles for genuine economic efficiency reasons, or as a smokescreen to hide behind, given that the capital, reporting and governance requirements on these vehicles are lighter than those incumbent on banks themselves,’ said the Treasury committee.

Audit heads from PricewaterhouseCoopers were hauled before the committee last year and quizzed on their valuations of Northern Rock’s asset-backed debt packages, but conceded that they were unable to fully answer the panel’s questions.

Analysts have been generally critical of the information released on off-balance sheet structures.

‘Because of the limited information banks provided about their involvement with these credit vehicles, it is impossible to predict just how much more they could be forced to write off if market conditions continued to deteriorate,’ one analyst said.

Separately, RBS came under fire this week over its results, which attempted to strip out its acquisition of ABN Amro.

The Dutch bank made a loss, with critics saying RBS wanted to say it was going to make money from ABN, but simultaneously saying it wanted to strip out the acquisition to show organic growth rates.

Analysts at JP Morgan described it as ‘some of the poorest disclosure we’ve seen.’