FCA fines Metro Bank PLC £10 million for compliance lapses

The Financial Conduct Authority (FCA) announced on Monday it has fined London-headquartered Metro Bank over £10 million for publishing incorrect information to investors.

The UK financial market regulator has also taken action against Metro Bank’s former Chief Executive Craig Donaldson and former Chief Financial Officer David Arden for being “knowingly concerned” with the company’s breach. Donaldson was fined £223,100 and Arden received a monetary penalty of £134,600.

As part of its quarterly financial results, Metro Bank also reports on its prudential position which includes the Risk Weighted Assets (RWA) on which its regulatory capital requirements are based. However, on its quarterly update on 24 October 2018, the bank published incorrect RWA numbers.

The FCA

In the official announcement, FCA alleges the bank was aware of its incorrect submission but did not offer an explanation in the quarterly update.

The FCA stated:

Metro Bank also failed to consider, and to seek legal advice on, whether the incorrect RWA figure ought to be qualified or explained in the October Announcement. As a result, Metro Bank failed to take reasonable care to ensure that the October Announcement was not false and misleading and did not omit relevant information.

The correct RWA figure was announced in January 2019 by the bank and resulted in a 39% fall in Metro Bank’s share price.

According to the FCA, Donaldson and Arden were aware that the incorrect RWA figure in the October quarterly update was wrong and would require substantial correction. Although Metro Bank has accepted the regulator’s decision, the former executives have appealed the regulatory decision to the Upper Tribunal.

Mark Steward, Executive Director of Enforcement and Market Oversight, said:

Listed firms must ensure that the information they are disclosing to the market is right. This is what investors are entitled to receive.

The UK’s Listing Rules impose high standards on issuers and their officers which Metro Bank, Mr Donaldson and Mr Arden failed to meet in this case.

Last week, the FCA fined Santander UK £107.7 million for recurrent anti-money laundering omissions.

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