The FCA has today fined Metro Bank plc £10,002,300 for breaching the Listing Rules by publishing incorrect information to investors.
The regulator has also fined two of Metro Bank’s directors, including the former CEO, for being “knowingly concerned” in Metro Banks’s breach of the listing rules.
Former Metro Bank chief executive Craig Donaldson has been provisionally fined £223,100 and former chief financial officer David Arden provisionally fined £134,600.
The two individuals have appealed their Decision Notices and fines to the Upper Tribunal. Metro Bank has not referred the FCA’s decision to the Upper Tribunal.
The Upper Tribunal will decide 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. As a result the actions against the two men will have no effect until their cases are decided by the Upper Tribunal.
Mr Donaldson was Metro Bank’s CEO from March 2009 until December 2019. Mr David Arden was Metro Bank’s CFO from March 2018 until February 2022.
The failings relate to issues around the bank’s quarterly results. Incorrect information about the bank’s Risk Weighted Assets (RWA) was published but not corrected in good time. When the errors were finally corrected the bank’s share price fell by 39%.
As part of its quarterly financial results, Metro Bank regularly reported to the market on its prudential position, including the RWA which dictates its regulatory capital requirements.
Metro Bank published incorrect information concerning its RWA figure in its third quarter trading update (the October Announcement) on 24 October 2018.
The watchdog said that 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 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. The FCA said that 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 believes 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, the FCA said.
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.”
• 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.
