Former Metro Bank heads were “knowingly” involved in a breach of listing rules over how mortgage assets were wrongly presented to the market.
The bank’s former chief executive Craig Donaldson and chief financial officer David Arden have had this position upheld by the Upper Tribunal court.
This comes after the original decision by the Financial Conduct Authority two years ago over events that took place in a third quarter trading statement in 2018, which later saw the lender topple from its perch as one of the country’s most successful challenger banks.
The City watchdog said the bank knowingly published errors when it said the risk weighted assets on its commercial loans totalled £7.4bn, which included property and certain specialist buy-to-let loans to large portfolio landlords.
The firm incorrectly said a risk weighting of 50% had been applied to the loan package.
The FCA says: “On 24 October 2018, Metro published an unqualified statement of the Metro’s risk weighted assets, and the capital ratios based on it.
“Metro knew at the time of a material error with the data, but did not inform the market.
“When amended numbers were published in January 2019, there was a 39% drop in Metro’s share price.”
The regulator fined Metro Bank £10m in December 2022, while Donaldson and Arden were fined £223,100 and £134,600, respectively.
FCA executive director of enforcement and market oversight Steve Smart adds: “Investors make decisions based on information shared by listed companies.
“They must be able to trust it’s accurate. Mr Arden and Mr Donaldson allowed information they knew to be wrong to be published.”
Donaldson and Arden have 14 days to appeal.
The ruling comes amid an approach to the lender by a private equity firm Pollen Street Capital about taking the business over.
The bank is valued at around £850m today, way off the peak £3.5bn valuation it hit in March 2018, following a lauded £1.6bn stock market debut in 2016.
