[2025] UKUT 00185 (TCC)

Mr Jaffey emphasised that the Bank had agreed with the PRA that it should maintain the existing RWA reporting position until the full review had been completed, and submitted that it was reasonable for the Bank to take the same approach in its Q3 Update. In oral evidence Mr Arden said that this was the normal process. He had the following exchange with Mr Stanley:

“Mr Stanley: Don't you accept that a person reading a financial statistic given by a bank would assume that it was a reliable and accurate statistic?

Mr Arden: I think a person reading a statistic on regulatory capital at a bank would assume that that number had been agreed with the PRA, or reported to the PRA, and that is exactly what had happened.

Mr Stanley: Even if it was reported as the wrong number?...

Mr Arden: But the PRA understood that.

Mr Stanley: And how would I, as an analyst sitting in my office understand that, reading this number?

Mr Arden: Until we had agreed the change in number with the PRA, the number was the number.

Mr Stanley: So you thought it was acceptable to report an unreliable number until the PRA had agreed the reliable one?

Mr Arden: That was the process that we had agreed with the PRA.”

Mr Donaldson similarly said: “everybody knows you use the numbers from the COREP in your announcements”, and there was then the following exchange:

“Mr Stanley: The PRA had not told you to use those numbers in anything you said to the market, had they?

Mr Donaldson: No…We were working on the agreement that was always done, that the COREP numbers were the numbers that were published to the market…and everybody knew we would be using the COREP numbers as they were, and that is what was put in there.

Mr Stanley: Presumably normally people would expect that the COREP numbers would be accurate.

Mr Donaldson: Within reason, yes.

Mr Stanley: They would be numbers that the bank believed would be right, correct?

Mr Donaldson: Absolutely, yes.

Mr Stanley: And on this occasion, they weren't, were they?

Mr Donaldson: No. We had issues to resolve and we needed to resolve them…”

Mr Stanley submitted that, while readers of information published by listed banks may assume that the same RWA figure would be provided to the PRA as to the market, that is because the reader would also assume that both are being provided with an accurate and reliable figure, and as Mr Donaldson had agreed, that was not the position here. The Bank and the PRA both knew that the RWA figure used in the COREP reports was wrong; as Mr Donaldson had accepted in cross-examination, the reason why the PRA had been told that the error would not be corrected in the September COREP reporting was to avoid any risk that they were misled by the figures shown in that return, but the market did not have the benefit of that explanation.