Metro Bank PLC
- Company Name
- Metro Bank PLC
- Stock Symbol
- Class Period
- March 6, 2018 to May 1, 2019
- Motion Deadline
- July 29, 2019
- Central District of California
The complaint charges Metro Bank and certain of its current and former officers and directors with violations of the Securities Exchange Act of 1934. Metro Bank, together with its subsidiaries, provides retail and commercial banking services in the United Kingdom.
The complaint alleges that throughout the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding Metro Bank’s business and operations. Specifically, defendants failed to disclose that Metro Bank had misclassified the risk terms of many of its loans and, accordingly, had failed to maintain sufficient capital. This conduct, in turn, would lead to investigations by the United Kingdom’s Prudential Regulation Authority (“PRA”) and Financial Conduct Authority (“FCA”) and to a reduction in deposits at Metro Bank from larger commercial and partnership clients. As a result of this information being withheld from the market, Metro Bank securities traded at artificially inflated prices of more than $55 per share during the Class Period.
Then, beginning in January 2019, the price of Metro Bank securities began to decline after a series of partial disclosures regarding Metro Bank’s misclassification of the risk of hundreds of millions of pounds in loans. On January 23, 2019, Metro Bank announced an increase in risk weighted assets driven by “an adjustment in the risk weighting of certain commercial loans.” The was followed by media reports describing Metro Bank’s “blunder” in misclassifying “hundreds of millions of pound of commercial property loans and loans to commercial buy-to-let operators,” which “should have been among its ‘risk-weighted-assets.’” On this news, the price of Metro Bank shares fell $10 per share, or nearly 35%, to close at $18.80 per share.
On February 27, 2019, the Financial Times reported that the PRA and FCA had initiated investigations into Metro Bank focusing on how the Company’s “employees miscalculated assets and then potentially created a false market in its shares by providing inaccurate statements to investors.” On this news, the price of Metro Bank shares fell $3.92 per share, or more than 22%, to close at $13.25 per share.
Then on May 1, 2019, Metro Bank announced its results for the first quarter of 2019. During a presentation to discuss the results, the Company’s CEO stated that the first quarter results reflected “the challenges from the broader operating environment, as well as some adverse sentiment which we have seen following our trading update from January.” He also stated that for the quarter, Metro Bank “saw a 3.6% reduction in [its] deposits [as a] result of a small number of commercial and partnership customers reducing deposit balances with us.” Following this disclosure, the Financial Times published an article stating that “[s]ome of Metro Bank’s largest customers left the bank after the discovery of a historic accounting error in the first quarter, damaging growth at the” Company. On this news, the price of Metro Bank shares fell $1.95 per share, or more than 18%, over the next two trading days to close at $8.50 per share on May 3, 2019.