[2025] UKUT 00185 (TCC)

The third item on the agenda, after the minutes of the July meeting and matters arising, was the Chief Risk Officer’s report for October. This had been circulated in advance. Its summary page, under “Credit Risk” said that “standardised RWAs continue to be above threshold”.

The related slide headed “Credit risk–bank wide” showed standardised RWAs in amber for September and July 2018, and in red for August. This was explained by the following text, which had been updated from that in the September paper, see §151:

“Standardised risk weighted assets versus plan has exceeded appetite since March owing primarily to the reclassification of CRE assets, the review of which is still on-going. This will remain in amber until the plan is rebased to take account of higher risk weights. This metric could increase by around 10 per cent (circa 40 million of capital) upon completion of the asset classification project.”

In reliance on Mr Arden’s and Ms Gillan’s evidence, we find that the first sentence relates to the previous CRE issue and final sentence relates to the correction of the risk-weighting for commercial mortgages from 50% to 100%, and that it was the latter which would cause the metric to remain in amber until that issue was rectified. As Ms Gillan said, the £40m of capital was “in the ballpark” for the reclassification of £500-£600m of CLIP mortgages as the result of their incorrect risk-weighting. We agree with Mr Stanley that two different issues had been unhelpfully conflated in this passage.

Although there was a discussion at the meeting about other elements of the Chief Risk Officer’s Report, there are no minuted comments about this item.