[2025] UKUT 00185 (TCC)

The Q3 Update was released on 24 October 2018. It included:

On the same day, Mr Hill, Mr Donaldson and Mr Arden participated in a call with analysts hosted by Bloomberg. Mr Donaldson said that “capital ratios remain robust with a total capital ratio of 19.1% and a CET1 ratio of 15.7%”. In answer to a question, Mr Arden said “we expect AIRB in H2 2019 and we are very comfortable with our capital plans for 2019”.

On 31 October 2018, Mr Arden was asked by an analyst at Jefferies to participate in a call with investors, so as to “clarify some of the issues particularly as regards the future capital requirements”.He was briefed before the call by Linklaters, as well as by the Bank’s brokers, Jefferies and Bank of America Merrill Lynch (“BAML”).

The call took place on 2 November 2018. The first part was pre-scripted and included Mr Arden saying:

“As we look forward, our application for AIRB is with the PRA, and our expectation remains that that will be an H219 event; that provides significant upside to capital efficiency, and on that path, we see no need for an equity raise until 2021.”

The second part was unscripted, and included a question from a Mr Nishil Patel, who asked:

“…the risk weight on the commercial real estate portfolio, if my math is right, it is 60.4%, which just seems low, given where those standardised risk weights should be. Do you mind just helping me understand the disparity there?”

Mr Arden responded:

“I have not got the details to hand, so I will probably get back to you. But just rest assured, we continuously look at all the risk weightings we have, and we are constantly reviewing that. I am afraid I have not got the math to hand.”

When cross-examining Mr Arden about that response, Mr Stanley said:

“This is the kind of problem that you get to, don't you, when you have put a statement out a few days before which has been inaccurate, and which you know is inaccurate, and someone is now asking you about it and you don't feel able to give them a straight answer.”

Mr Arden responded “Correct”. In the course of the interview carried out by the Authority, he said he had subsequently got back to Mr Patel, and told him that “we continually review the details of our lending classifications and associated risk weights”, which echoes what he had said during the call.