PRA fines Metro Bank £5.3m over reporting failures

Metro Bank has been fined £5,376,000 for accounting errors that forced the bank to raise £375 million from its shareholders to shore up its balance sheet.

In January 2019 Metro disclosed errors in its accounting treatment of professional buy-to-let loans and loans secured by commercial mortgages. The mistakes went back to May 2016 and meant that Metro had to increase its risk-weighted assets by £900 million and was not holding enough capital.

The Bank of England’s Prudential Regulation Authority (PRA) said it had levied the penalty on Metro for “failing to act with due skill, care and diligence” in the regulatory reporting of its capital position and for shortcomings in its governance and controls.

Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive Officer of the PRA 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.”

Firms are required to submit periodic financial information to the PRA, including reports as part of the COREP framework, a reporting framework introduced to standardise the reporting of capital requirements and prudential regulatory information. These COREP returns include (amongst others) quarterly reporting on a firm’s current assessment of its risk-weighted assets.