"Standard Chartered’s systems, controls and oversight fell significantly below the standards we expect of a systemically important bank, and this is reflected in the size of the fine in this case."
This is the PRA’s highest ever fine in a PRA-only enforcement case.
In October 2017, the PRA imposed a temporary additional liquidity expectation on SCB in response to concerns about heightened risk of USD liquidity outflows (“the liquidity metric”). This temporary expectation has now been removed. While SCB’s overall liquidity position remained in surplus to its core liquidity requirements, between March 2018 and May 2019, SCB made five errors reporting the liquidity metric which meant the PRA did not have a reliable overview of its USD liquidity position.
In relation to one of the misreporting errors, SCB only notified the PRA of the error after a four-month internal investigation into the issue.
The PRA’s investigation identified that SCB’s internal controls and governance arrangements underpinning its regulatory reporting in relation to the liquidity metric were not implemented or operating effectively. These issues contributed to SCB’s liquidity miscalculations and misreporting and also to the failure to be open and cooperative with the PRA.
SCB agreed to resolve the matter and therefore qualified for a 30% reduction in the fine imposed by the PRA. Without this discount, the fine imposed would have been £66,500,000.
Sam Woods, deputy governor for prudential regulation and CEO of the PRA, said: “We expect firms to notify us promptly of any material issues with their regulatory reporting, which Standard Chartered failed to do in this case. Standard Chartered’s systems, controls and oversight fell significantly below the standards we expect of a systemically important bank, and this is reflected in the size of the fine in this case.”
