Metro Bank fined £10m for 2018 breach of FCA rules

The Financial Conduct Authority has fined Metro Bank £10m for breaching the listing rules by publishing incorrect information to investors, it announced on Monday.

It also decided to fine Metro Bank’s former chief executive officer Craig Donaldson, and its former chief financial officer David Arden, a respective £223,100 and £134,600 for “being knowingly concerned” in the bank’s breach.

Metro Bank had not referred the FCA’s decision to the Upper Tribunal, while Donaldson and Arden had referred their respective decision notices to the tribunal, where they would each present their case, making those two decisions by the FCA preliminary at present.

As part of its quarterly financial results, Metro Bank regularly reported its prudential position to the market, including the risk-weighted assets on which its regulatory capital requirements were based.

Metro Bank published incorrect information concerning its risk-weighted assets figure in its third-quarter trading update on 24 October 2018.

The FCA said Metro Bank was aware at the time that the 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 seek legal advice on, whether the incorrect figure should have been qualified or explained in the announcement.

As a result, Metro Bank failed to take reasonable care to ensure that the announcement was not false and misleading, and did not omit relevant information.

The City regulator said it considered that Donaldson and Arden were “knowingly concerned” in Metro Bank’s breach of the listing rules.

It claimed they were aware that the risk-weighted assets figure in the October announcement was wrong, and would require correction.

Despite that, they failed to consider whether the figure needed to be qualified or explained, and also failed to seek legal advice on the question, the FCA alleged.

When the correct risk-weighted assets figure was announced in January 2019, it contributed to a 39% fall in Metro Bank’s share price.

“Listed firms must ensure that the information they are disclosing to the market is right,” said the FCA’s executive director of enforcement and market oversight, Mark Steward.

“This is what investors are entitled to receive.

“The UK’s listing rules impose high standards on issuers and their officers which Metro Bank, Donaldson and Arden failed to meet in this case.”

At 0853 GMT, shares in Metro Bank were up 1.98% at 108.1p.

Reporting by Josh White for Sharecast.com.