Metro Bank fined for misleading investors over 2018 accounting blunder

Metro Bank and two of its former executives were fined yesterday for misleading investors.

The company was fined £10m by the Financial Conduct Authority after it published misinformation in October 2018 about an accounting blunder in its quarterly results that plunged the lender into crisis.

The watchdog also fined former CEO Craig Donaldson £223,100.

Ex-finance boss David Arden was fined £134,600.

Both had “knowingly” participated in the breach, the regulator said, adding that both men were “aware” that the information was “wrong and would require substantial correction.”

When Metro finally disclosed the £900 million mistake to investors three months later in January 2019, its shares plunged 39 per cent in one day over concerns about its financial health.

“Metro Bank has failed to ensure that the October announcement was not false, misleading or omitted any relevant information,” said a spokesman for the FCA.

Mark Steward, executive director of enforcement and market surveillance at the FCA, added: ‘Listed companies must ensure that the information they disclose to the market is accurate.

This is what investors are entitled to. UK listing rules place high demands on issuers and their officers, which Metro Bank, Mr Donaldson and Mr Arden failed to meet in this case.”

The inaccuracy involved Metro’s risk-weighted assets figure, and specifically how it assessed the risk of buy-to-let loans and commercial mortgages.

Applying the wrong level of risk to these loans left the bank with insufficient capital, which put a hole in its finances.

The scandal plunged Metro into crisis, throwing expansion plans off the rails and forcing it to raise money from investors for emergency funds.

The FCA’s fine followed a £5 million fine from the Prudential Regulation Authority last year after the watchdog concluded the company failed to act with “appropriate skill, care and diligence” in reporting its finances.

A spokesman for Metro Bank said the £10m fine was ‘fully foreseen’ and that it had made a ‘substantial investment’ to improve reporting procedures following the incident.

The bank added that it was “fully cooperating with the FCA investigation” and accepted the outcome.

Donaldson, who resigned from the company in December 2019, and Arden, who left in April this year, said they will appeal their fines.

In a joint statement, they said they were “disappointed” by the ruling, but welcomed “the fact that no dishonesty or criticism of our integrity has been found.”

However, shares in the company rose 6.2 percent, or 6.6 pence, to 112.6 pence, amid a flurry of investor relief that a line had been drawn under the scandal.