REG - Financial Conduct - FCA fines Metro Bank Plc £10 million

Metro Bank HoldingsAnnouncement

12/12/2022 08:15

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RNS Number : 3486J  Financial Conduct Authority  12 December 2022

FCA fines Metro Bank PLC £10 million and publishes Decision Notices for two
of its former executive directors

The FCA has fined Metro Bank PLC £10,002,300 for breaching the Listing Rules
by publishing incorrect information to investors.

The FCA has also decided to fine Metro Bank's former Chief Executive Craig
Donaldson and former Chief Financial Officer David Arden £223,100 and
£134,600, respectively, for being knowingly concerned in Metro Bank's breach.

Metro Bank has not referred the FCA's decision to the Upper Tribunal.  The
two individuals have referred their respective Decision Notices to the Upper
Tribunal where they will each present their case.  Any findings in the
individuals' Decision Notices are therefore provisional and reflect the FCA's
belief as to what occurred and how it considers their behaviour should be
characterised.

The Upper Tribunal will determine whether to uphold the FCA's decisions
against the two individuals or not and whether there are any other actions
that should be taken by the FCA. The Upper Tribunal's decision will be made
public on its website following a hearing. Accordingly, the action outlined in
the individuals' Decision Notices will have no effect pending the
determination of the cases by the Upper Tribunal.

As part of its quarterly financial results, Metro Bank regularly reported to
the market on its prudential position, including the Risk Weighted Assets
(RWA) on which its regulatory capital requirements are based.  Metro Bank
published incorrect information concerning its RWA figure in its third quarter
trading update (the October Announcement) on 24 October 2018.

Metro Bank was aware at the time that this figure was wrong and failed to
qualify it or explain in the October Announcement that it was subject to an
ongoing review and would require a substantial correction.   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 FCA considers that Mr Donaldson and Mr Arden were knowingly concerned in
Metro Bank's breach of the Listing Rules.  They were aware that the RWA
figure in the October Announcement was wrong and would require substantial
correction.  Despite this, they failed to consider whether the figure ought
to be qualified or explained and failed to seek legal advice on this
question.  When the correct RWA figure was announced in January 2019, it
contributed to a 39% fall in Metro Bank's share price.

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."

Notes to editors

·    Metro Bank is a dual-regulated firm which was initially admitted to
the Official List of the London Stock Exchange in 2016 and at the time of the
announcement, was a member of the FTSE 250.

·    Final Notice for Metro Bank PLC
(https://www.fca.org.uk/publication/final-notices/metro-bank-2022.pdf)

·    Decision Notice for Craig Donaldson
(https://www.fca.org.uk/publication/decision-notices/craig-donaldson-2022.pdf)

·    Decision Notice for David Arden
(https://www.fca.org.uk/publication/decision-notices/craig-donaldson-2022.pdf)

·    Mr Craig Donaldson was Metro Bank's CEO from March 2009 until
December 2019.

·    Mr David Arden was Metro Bank's Chief Financial Officer (CFO) from
March 2018.

·    On 22 December 2021, the PRA published a Final Notice against Metro
Bank and imposed a penalty of £5,376,000 for failings associated with the
Bank's RWA reporting to the PRA.  The PRA's Final Notice can be found at
https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/regulatory-action/final-notice-from-pra-to-metro-bank.pdf
(https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/regulatory-action/final-notice-from-pra-to-metro-bank.pdf)

 

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