Bank of England’s PRA fines Metro Bank £5.4m over governance issues
10:51, 22 December 2021
The Bank of England’s (BoE) Prudential Regulation Authority (PRA) watchdog has fined Metro Bank £5.4m for failing in its regulatory reporting governance and controls.
In a statement published on Wednesday, the BoE said it imposed the penalty on Metro Bank over failings between May 2016 and January 2019.
“The Prudential Regulation Authority (PRA) has imposed a financial penalty on Metro Bank plc (Metro Bank) of £5,376,000 for failing to act with due skill, care and diligence in relation to the 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," the Bank of England said.
“On 23 January 2019, Metro Bank announced that it had adjusted the risk weightings of certain commercial loan portfolios on its balance sheet, to reflect corrections that it had made."
Sam Woods, deputy governor for Prudential Regulation and chief executive of the PRA, commented on the penalty.
“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,” Woods said.
Key failings
The Bank of England highlighted some of Metro Bank’s key failings, which included failing to take sufficient care to ensure that it complied with its obligations to make accurate reports to the PRA; and ensuring effective oversight, challenge and to establish effective, clear and documented escalation routes in respect of reporting.
Metro Bank failed to 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.
“As a result, Metro Bank breached Fundamental Rule 2 and Fundamental Rule 6 of the PRA Rulebook. Fundamental Rule 2 requires that a firm conducts its business with due skill, care and diligence,” the BoE said.
“Fundamental Rule 6 requires that a firm organises and controls its affairs responsibly and effectively. These failings impacted on the PRA’s advancement of its primary objective to promote the safety and soundness of Metro Bank."
Metro Bank has agreed to resolve the matter and as a result has qualified for a 30% reduction in the fine imposed by the PRA, the BoE said.
“Without this discount, the fine imposed by the PRA would have been £7,680,000,” it added.