- Metro penalised for capital reporting error
- Further action from FCA still a possibility
The Bank of England imposed a £5.4m fine on Metro Bank (MTRO) on Wednesday for failures in its regulatory reporting.
The bank’s Prudential Regulation Authority said the 11-year-old lender had failed “to act with due skill, care and diligence” when submitting reports between May 2016 and January 2019.
The lender announced in January 2019 that it was adjusting the size of its risk-weighted assets by £900m because it had previously applied an incorrect risk weighting to some of its commercial loans.
The bank had grown rapidly in the run-up to this announcement but had failed to develop its governance at the same pace, the authority said.
“We expect firms to invest appropriate and adequate resources to ensure that they submit accurate regulatory returns. In this case, Metro Bank failed to meet the standards of governance and controls expected of it,” the authority’s chief executive, Sam Woods, said.
Metro’s share price rallied by 3 per cent as the lender said the fine signalled the conclusion of the PRA’s probe, which it had “cooperated fully” with. It added that it had strengthened its regulatory reporting and controls since the incident.
However, there was no update on an ongoing probe by the Financial Conduct Authority.
Metro’s shares have fallen by 32 per cent since the start of the year, continuing a long-running trend. The shares fell 40 per cent in a single day when Metro first revealed the £900m adjustment almost three years ago.
Although its shares are now priced well below industry competitors based on their book values, the lender continues to lack sufficient scale and still has the threat of further action from the FCA hanging over it. Sell.
