[2025] UKUT 00185 (TCC)

We have already found as facts that on 18 January 2019, Mr Arden discussed with Mr Donaldson, Mr Lane and others “the possibility” that the PRA would allow the Bank “to ringfence £300m of RWAs for sale…and allow the remaining £600m to be phased in over a period”, and that Mr Arden had noted that this “potentially” would mean that the Bank did not have to change its RWA figures. On 22 January 2019, the PRA rejected that possibility.

Mr Donaldson’s evidence was that the idea of phasing in the extra RWAs was put forward by Deloitte; when asked in cross-examination when it was considered, he initially avoided giving a straightforward answer, but finally agreed that it was not discussed until after the Bank had received the results of the Deloitte review, and we so find.

Mr Jaffey invited the Tribunal to find that, had the Bank made this request at an earlier time, it would have been refused, and that this finding should be made as an “adverse inference”, because the Authority could have called witnesses from the PRA but did not do so. We do not need to make an adverse inference to find on the balance of probabilities that had the Bank suggested phasing-in at an earlier stage, it would have been rejected. That is because the PSM letter said the PRA was “uncertain about the materiality of any prospective adjustment to your capital position” and required Mr Arden to provide an attestation.

However, we add that:

Mr Jaffey also asked the Tribunal to make adverse inferences that (a) the PRA had received the request at “the appropriate time” and (b) the PRA had the power to grant the request but it was refused. However, neither point is relevant to the issue we have to decide, which is whether it would be reasonable for an issuer to provide RWA figures to the market which it knew to be incorrect, on the basis that the PRA might in the future agree to phase in the RWA adjustment. We have no hesitation in finding that the answer to that question is plainly no. A reasonable issuer would not have decided in October 2018 that it could publish figures it knew to be wrong, on the basis that the PRA might allow the correction to be phased in, when that possibility had never been raised with the PRA.