Sir Fred Goodwin's "assertive and robust" management style was flagged as a potential risk to RBS as early as 2003, the FSA said today.
The regulator raised concerns about chief executive dominance during its meetings with the bank's chairman over the following three years but was assured that the rest of the board provided an adequate challenge to Sir Fred.
The report also highlighted the strained relationship between the FSA and Sir Fred prior to 2005, in particular RBS's reluctance to allow its non-executive directors to meet the FSA on an individual one-to-one basis.
It added: "FSA supervisory records from 2004 suggest that RBS management, and in particular the RBS chief executive, had been resistant to what they saw as unnecessary FSA interference."
The bank stood out among its peers in terms of the regularity and vigour of its pushback against FSA policy initiatives, although the watchdog said its relationship began to improve after a clear-the-air meeting with Sir Fred in October 2004.
Highlighting the deficiencies in RBS's management, governance and culture, the FSA said that under Sir Fred's leadership the RBS board failed to consider in sufficient depth the risks involved in its ABN Amro takeover, preferring to concentrate on the scope for cost-cutting and synergies.
The report suggests that RBS's successful acquisition and integration of NatWest in 2000, which was overseen by Sir Fred, may have led to over-confidence in the board's thinking on the ABN Amro takeover.
Former investment banking boss Johnny Cameron told an FSA team: "After we bought NatWest, we had lots of surprises, but almost all of them were pleasant. And I think that lulled us into a sense of complacency around that."
While the hostile nature of the takeover meant it could undertake only limited due diligence, the FSA said the 17-strong RBS board failed in its duties over the ABN takeover.
It added: "With so much at stake, there was a critical need for more fundamental probing, questioning and challenge by the board."