Metro Bank senior managers are being grilled by the U.K. Financial Conduct Authority (FCA) about a misreporting scandal that caused stock values to fall in excess of 80 percent, the Financial Times reported on Tuesday (Sept. 17).
The FCA first began investigating the high street bank in February after it miscalculated the capital needed for numerous loans. Six months later, the financial regulator said the probe was widened to involve “certain senior members of management.” The extended scope of the probe was exposed following a bond prospectus.
Metro Bank is also being investigated by the Bank of England’s Prudential Regulation Authority and is ready to issue loss-absorbing debt as required of large banks.
Regulators are also looking over Metro Bank’s regulatory reporting and governance for compliance.
“As you would expect, we are in regular dialogue with the FCA and the extended scope is part of the ongoing investigation that we announced on 26 February 2019. We welcome the progress being made and look forward to this investigation reaching its conclusion,” Metro Bank told the newspaper.
News of the investigation caused an initial $2.5 billion drop in customer deposits during the first six months of 2019, the report said. Deposits are now on the upswing from about $17 billion at the end of June to $18 billion at the end of August.
Metro Bank has been mired in controversy and in May was hit with an investigation by two New York law firms, Pomerantz and Levi & Korsinsky, on behalf of investors concerned that the institution committed securities fraud. Law firm Glancy Prongay & Murray also launched a probe earlier in May.
In January, the Bank of England discovered that a significant number of commercial loans within the bank were misclassified. In February, the bank was targeted by a cyberattack in which criminals penetrated its customer text messaging system, leading some Metro customers to fall for the fraud.