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Former Metro Bank bosses fined by the FCA.

 

Craig Donaldson, who was Metro’s chief executive, and David Arden, its former finance chief, had been aware that information published by the London-listed lender in quarterly results in 2018 «was wrong and would require substantial correction», according to the Financial Conduct Authority. Donaldson was fined £223,100 and Arden has been handed a £134,600 penalty. Metro has been fined £10 million, but is not challenging the penalty. The bank had told investors last week that it was preparing for a fine of this size.


Metro is still trying to recover from the accounting debacle, which knocked its expansion plans off course and meant the group had to raise £375 million from shareholders later in 2019 to shore up its finances. The problems centred on Metro’s accounting treatment of professional buy-to-let loans and commercial mortgages. The FCA said Donaldson and Arden had been told in August 2018 that the bank’s risk-weighted assets would need to be increased by about £900 million. The errors were confirmed by a consultant the next month and the Bank of England’s Prudential Regulation Authority was also made aware of the miscalculation.

Nevertheless, Metro continued to use erroneous risk-weighted asset numbers in third-quarter results that it released on October 24, 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,» the regulator said, adding that the lender had «failed to take reasonable care» to ensure the announcement «was not false and misleading and did not omit relevant information». This contravened market rules and Donaldson and Arden were «knowingly concerned» with the breach, the regulator said, as a result of «a lack of competence» by the former executives. It noted that both Donaldson and Arden had told brokers on the day of the third-quarter results that they were «comfortable» with Metro’s capital plans for 2019.

Donaldson stood down as Metro’s boss in December 2019 and Arden left in February. Metro said the conclusion of the FCA and PRA inquiries «represents an important milestone» and that it had made «substantial investment» to improve its disclosure procedures. Metro shares rose 6½p, or 6.2 per cent, to 112½p.
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