The Prudential Regulation Authority (PRA) has issued a £5.3m fine to Metro Bank for failings with its regulatory reporting.
The regulator said the bank has failed to “act with due skill, care and diligence” with its regulatory reporting of its capital position and for failings in its regulatory reporting governance, controls and investment with respect to its Common Reporting (COREP) returns sent to the PRA between 13 May 2016 to 23 January 2019.
On the 23 January 2019, Metro Bank stated it had adjusted the risk weightings of certain commercial loan portfolios on its balance sheet, to reflect corrections that it had made.
Regulations require firms to submit periodic financial information to the PRA, including reports as part of the COREP framework. The framework was introduced to standardise reporting of capital requirements and prudential regulatory information.
The PRA explained that on 23 January 2019, Metro Bank’s adjustment to its assessment of its RWA for December 2018 of approximately £900 million meant it had an incorrect risk weighting to certain commercial loans. Whilst the bank maintained compliance with its regulatory capital requirement, the application of the wrong risk-weight gave an inaccurate picture of the firm’s regulatory capital position being presented to the PRA.
It continued to state that prior to 2019, Metro Bank had pursued rapid growth and expansion. However, it failed to ensure commensurate development of, and investment in, governance arrangements and systems and controls relating to its COREP reporting, which it failed to design, implement or operate effectively in a number of respects, the PRA stated.
It specific COREP reporting failures included: not taking sufficient care to make accurate reports to the PRA; not ensuring effective oversight and clear and documented escalation routes in respect of reporting; establish and implement effective controls in interpreting relevant regulatory rules and guidance; and allocate appropriate and adequate resources to enable it to comply with its reporting obligations.
PRA CEO Sam Woods 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, resulting in today’s enforcement action.”
Metro Bank agreed to resolve the matter, which qualified it for a 30% reduction to the fine.
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