[2025] UKUT 00185 (TCC)

"As reported to the previous meeting, the bank had identified that some commercial assets were receiving the wrong risk weighting, which had been driven by a lack of clarity and conflicting rules in the regulatory publications. The bank is now remediating this issue. The issue had affected many of the bank's peers for whom this was a wider issue. The issue had been identified in the COREP audit in 2017 and subsequently picked up by the PRA as part of the previous ICAAP submission. The management team was carrying out a separate piece of assurance work to remediate the issues and declare the quantum of the error in the next ICAAP submission. There had also been a number of minor issues. However, the commercial business was now largely correctly risk weighted. Although it would not completely mitigate against these issues, the move to AIRB would help to address this…”

The use of incorrect risk weightings had not been “driven by a lack of clarity and conflicting rules in the regulatory publications”. It had been caused by the Bank’s staff failing to identify and apply the rules which applied to UK banks.

The commercial business was not “now largely correctly risk weighted” because, as Mr Arden agreed in cross-examination, the Bank had not yet “taken the risk-weightings through” into the CLIP numbers, and no adjustment had been made for them.