Upper Tribunal Tax and Chancery Chamber

[2025] UKUT 00185 (TCC)

Fecha: 09-Abr-2025

What was said by Mr Arden at the meeting

What was said by Mr Arden at the meeting

317.

As set out at §§297-300, we have already found that Mr Lane was told by Mr Arden:

(1)

there were “regulatory interpretation issues” about the classification;

(2)

this had been raised as a “potential issue” by the PRA;

(3)

the estimate of £600m was based on sampling; and

(4)

the PRA had agreed that no immediate changes were necessary.

318.

However, none of those statements was true at the time they were made. In addition:

(1)

Mr Arden told Mr Lane that the Bank was “potentially having to re-weight the CRE loan portfolio”, when the Bank had told the PRA that it was remediating the issue so as to use the correct 100% risk weighting for the CLIP loans; and

(2)

Ms Roberts’s email twice refers to the existence of an “ongoing dialogue” with the PRA about the issue, when there was no dialogue: instead, the Bank had simply told the PRA that it was remediating the issue. We make the reasonable inference from the duplicate mention in Ms Roberts’s email that Mr Arden also told Mr Lane that there was an ongoing dialogue.

319.

Ms Roberts also recorded that Mr Arden had told Mr Lane that the Bank had “a problem with the risk weight classification of some commercial assets”, and Mr Lane recalls that Mr Arden “explained the general nature of the issues”. When Mr Arden was asked in cross-examination whether he had also told Mr Lane that it was certain that an adjustment would be required, he repeatedly said “I don’t recall”; he would only confirm that he had talked about “the regulation interpretation issues and the data quality issues”. We make the reasonable inference that Mr Arden did not tell Mr Lane that the Bank had misapplied the rules requiring that the CLIP loans be risk weighted at 100% and that in consequence an adjustment would be required.

320.

Mr Lane’s evidence was that:

“The impression I received from David Arden was that there was a high level of uncertainty regarding whether an adjustment would be required. Also, if there was to be an adjustment, the amount could be highly variable due to underlying data and regulatory interpretation issues. Further work was needed to be done with Deloitte along with further interactions with the PRA.”

321.

He also said that:

“David Arden indicated that he didn’t feel that the issue would necessarily be material in terms of impacting Metro Bank’s growth ambitions and future financial performance. He indicated he thought that even in a worst-case outcome Metro Bank would remain well capitalised, in excess of its minimum regulatory capital requirements.”

322.

Mr Arden responded to this evidence in his second witness statement, saying:

“I stated that I did not believe the RWA issue would be material in the context of the Bank's future strategy…However, I did not think the RWA issue was an irrelevant issue for the Bank…If I thought it was immaterial I would not have sought the advice of Linklaters.”

323.

Mr Arden thus confirmed Mr Lane’s recollection that he had said the RWA adjustment would not be material. He did not deny that he had told Mr Lane that “further work was needed to be done with Deloitte along with further interactions with the PRA” before the Bank could know the position.

324.

We find as a fact that as the result of the information provided by Mr Arden in the course of the meeting, Mr Lane had the incorrect impression that:

(1)

there was a high level of uncertainty as to whether an adjustment would be required;

(2)

if there was to be an adjustment, the amount could be highly variable;

(3)

this was due to underlying data and regulatory interpretation issues;

(4)

even in the worst case the outcome was not necessarily material; and

(5)

the position would not be clear until Deloitte had done further work and there had been further interactions with the PRA.