Type of Claim: Investigating
Claim Period: To be determined
Defendants: Metro Bank Plc
Governing Law: English law
Limitation: 22 January 2025
On 23 January 2019, Metro Bank announced a preview of its results for the 2018 fiscal year and a trading update. It stated its risk weighted assets for the full year were expected to increase to approximately £8.9bn. This increase was driven by both net loan growth, and an adjustment in the risk weighting of certain commercial loans secured on property and certain specialist buy-to-let loans to large portfolio landlords.
On an investor conference call on the 23 January 2019, David Arden, the chief financial officer of Metro Bank, stated: “These changes in the commercial loans and the specialist buy-to-let came to light following an internal review in preparation for our year-end. I’m sure you’ve done the maths, but the one-off adjustments will be around £900m.”
He continued: “On RWAs [risk weighted assets], as I said, we identified the need for making the adjustment following an internal review in preparation for our year-end. That review has been augmented by, with support from a big-four audit firm and the review was comprehensive of our commercial portfolio and we’ve discussed our findings with the PRA [Prudential Regulation Authority]. We’ve communicated this as soon as we possibly can, hence the call this morning.”
On 31 January 2019, Metro Bank admitted that the errors with regards to the risk-weighting on assets had been pointed out by regulators at the Bank of England and not found by its internal review. The Bank of England’s Prudential Regulation Authority, which supervises large banks and insurers, informed Metro Bank of suspected issues in some parts of its loan book, prompting a wider internal review that discovered the full extent of the mistakes. Analysts first raised concerns about the issue more than 18 months ago.
Metro Bank’s share price closed at £22.02 on 22 January 2019 and declined to close at £10.87 on 31 January 2019, a market capitalisation drop of approximately £1bn.
Stewarts is monitoring the situation to determine whether shareholders may have a claim against Metro Bank Plc.
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