NatWest doubles Coopers team
By Phillip Inman Scandal-hit investment bank NatWest Markets has more than doubled the size of its investigation team from Coopers & Lybrand in the second phase of its probe into how it lost #90m over three years in its interest-rate options department. Four forensic accountants have been drafted in to join an enhanced team of derivatives and banking specialists from the firm. They will examine the role played by NatWest?s auditor, KPMG. KPMG had at least two chances since the mis-pricing began in 1994 to check at the year-end the management controls and trading models used by NatWest. KPMG was paid #4.1m for audit services in 1994-95, the lowest fee paid by any of the big four clearing banks. But the firm won #11.5m in add-ons, which included a large slice of IT consultancy work in NatWest Markets where it helped install back-office and risk-control systems. NatWest chief executive Derek Wanless has suspended four executives. He has also passed a copy of the preliminary report to the Serious Fraud Office. KPMG refused to comment on its involvement, but the inability of auditors to spot trading losses has led some City analysts to question whether audits give banks a false sense of security. Richard Colman, banking analyst at Merrill Lynch, said: ?Audits take a snapshot in time. That?s reasonable in a slow-moving retail bank, but gives false comfort in trading situations where everything can change in a few days.?
