Banking arrangements ‘forced’ PwC resignation of Royal Bank of Scotland audit contract

The merger compromised PwC’s independence as auditor since Natwest is the firm’s bank.

And, if the Royal Bank retained PwC as auditor, it stood to lose one of its major corporate clients. Following a feasibility study, PwC told the bank it could make arrangements that would preserve its independence, but the Royal Bank declined to keep its services.

As a result, Deloitte & Touche is now poised to take over as auditor of the merged bank.

A PwC spokesman confirmed NatWest was the firm’s corporate banker but could not say anything further.

The choice of Deloittes is also reported to have come about because had PwC retained the contract, it would have audited three of the biggest clearing banks. It already audits Lloyds TSB and Barclays Bank while KPMG is auditor to HSBC and Halifax.

RBS is reported to have chosen Deloittes because it did not present conflict of interest problems and it wanted to be audited by a Big Five firm.

RBS chief executive Fred Goodwin is a former Touche Ross partner from the days before its merger with Deloittes.

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