[2025] UKUT 00185 (TCC)

On 19 October 2018, Mr Somers sent an email to Ms Gillan and others, headed “Information to Deloitte”. It read (our emphasis):

“Deloitte have asked Olivier [Baixas] to provide information regarding weaknesses in rwa and provision calculation process. He has a long list (ltv calculations, cross collateral, connected parties and others)..as far as I know all of which will prove non-material (the biggies I have highlighted), but to be fair I can’t be sure as there are significant gaps in data recording and you can’t prove what you can’t measure. There is however only so much reporting change you can adopt at any one time so haven’t driven these hard as believe would be more disruptive than constructive.

There is the risk this will create more noise than light so you may need to pre warn David Arden? I have asked Olivier for a copy of anything he sends to Deloitte. If you want to review what he is sending in advance then can also do that.”

Mr Somers’ evidence was that he was here focusing on the provisioning, because issues such as loan-to-value calculations, cross collateral and connected parties are not relevant to risk-weighting. This evidence was challenged by Mr Jaffey, but rebutted by Mr Somers on the basis that the recipients of the email would have been aware from the context that “loan value and those aspects don’t affect commercial mortgages”, although it could have some effect on PBTL.

Mr Pritchard subsequently asked Mr Dransfield to agree that loan-to-value “could be relevant to the RWA calculation [for] PBTL”, but Mr Dransfield said that this was only the case for residential properties. In closing, Mr Jaffey said Mr Somers’ evidence had therefore been shown to be “not correct”, and he supported this by reference to Article 125(2)(d) of the CRR. However:

Having considered all the above, we accept Mr Somers’ evidence that in this email he was referring to provisioning, not risk-weighting.