January 31, 2019 / 10:31 AM / in 6 months

PRA uncovered potential accounting error in Metro loans before internal review

LONDON, Jan 31 (Reuters) - Embattled British lender Metro Bank said the Prudential Regulation Authority had identified “potential inconsistencies” in the risk weighting of some of its loans, prompting an internal review that later led to a massive fall in its capital.

In a statement on Thursday, Metro said it then undertook a comprehensive review of its loan book in order to establish the full picture before its fiscal full year, following the PRA advice.

On Jan 23, it said its risk weighted assets had risen by around 900 million pounds ($1.18 billion), ramping up pressure on its core capital ratio - a widely-tracked measure of bank strength - which now stood at 15.8 percent, down from 19.1 percent in the third quarter.

The bank’s shares, which suffered the biggest one-day fall seen in a UK lender since the financial crisis, fell 6 percent to a fresh record low on Thursday. ($1 = 0.7614 pounds) (Reporting By Sinead Cruise, editing by Lawrence White)

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