The Bank of England (BoE)’s Prudential Regulation Authority (PRA) has hit Metro Bank with a £5.4m fine for failures in its reporting duty.

Specifically, the PRA says the bank made four errors in its Commons Reporting. It says it failed to:

• take sufficient care to ensure that it complied with its obligations to make accurate reports to the PRA;
• ensure effective oversight, challenge and to establish effective, clear and documented escalation routes in respect of reporting;
• establish and implement effective controls in interpreting relevant regulatory rules and guidance; and
• allocate appropriate and adequate resources to enable it to comply with its reporting obligations.

This, the PRA says, breaches fundamental rule 2 and fundamental rule 6 in its rulebook.

The failure took place between 13 May 2016 and 23 January 2019.

On 23 January 2019, the PRA details, the Metro Bank announced that it was making an adjustment to its assessment of its risk weighted assets (RWA) for December 2018 by “approximately” £900m because it had applied the wrong risk weighting to some commercial loans.

“Whilst Metro Bank remained in compliance with its regulatory capital requirement,” says the PRA, “the application of the incorrect risk-weight resulted in an inaccurate picture of the firm’s regulatory capital position being presented to the PRA”.

PRA chief executive officer Sam Woods says: “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.”

In a note posted to the regulatory news service, Metro Bank says: “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.

“It has also strengthened its broader risk management and governance, demonstrating its commitment to accurate regulatory reporting and compliant growth.”

Having agreed to resolve the matter, Metro Bank’s fine was reduced by 30% from its original total of £7.7m.