(Alliance News) - The UK Prudential Regulation Authority on Wednesday imposed a GBP5.4 million penalty on Metro Bank PLC, for breaching Fundamental Rules two and six of the PRA Rulebook between May 2016 and January 2019.
Fundamental Rule two requires that a firm conducts its business with due skill, care and diligence, while Fundamental Rule six requires that a firm organises and controls its affairs responsibly and effectively.
The UK regulator said the the retail bank had failed to act with skill, care and diligence in the regulatory reporting of its capital position and failings in its regulatory reporting governances.
On January 23, 2019, Metro had announced that it was making an adjustment to its assessment of risk-weighted assets for December 2018 of GBP900 million, as a result of Metro Bank applying the incorrect risk weighting to certain commercial loans.
Despite remaining in compliance with its regulatory capital requirement, the application of the wrong risk-weight led to an inaccurate picture of the firm's regulatory capital position.
"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," said Sam Woods, chief executive officer of the PRA.
Since Metro Bank had agreed to resolve the matter, it had qualified for a 30% reduction to the fine, which initially would have been GBP7.7 million.
"In the time since the RWA errors that were the basis of the PRA's investigation were identified, Metro Bank has made significant improvements to, and substantial investment in, its regulatory reporting processes and controls," Metro Bank stated.
Shares in Metro Bank were up 1.5% at 89.30 pence on Wednesday in London.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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Metro Bank (MTRO)