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The Bank of England has fined Standard Chartered £46.5m for repeatedly misreporting its liquidity position and for “failing to be open and cooperative” with the regulator.
The Bank’s Prudential Regulation Authority (PRA) said Standard Chartered had made five errors in reporting an important liquidity metric between March 2018 and May 2019, which meant the watchdog did not have a reliable overview of the bank’s US dollar liquidity position.
At the time, the lender was temporarily subject to extra liquidity requirements because the PRA was concerned about US dollar outflows.
The regulator said this was the largest fine it had ever levied in a case where it was the only enforcing body.
“We expect firms to notify us promptly of any material issues with their regulatory reporting, which Standard Chartered failed to do in this case,” said Sam Woods, the chief executive of the PRA.
“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.”
In October 2017, the PRA temporarily imposed extra liquidity requirements on Standard Chartered, because it was concerned about “heightened risk” of US dollar outflows.
Even though the bank’s overall liquidity remained above regulatory requirements during the period, the regulator said multiple errors caused liquidity miscalculations.
One of the errors occurred in November 2018, as a result of a mistake in a spreadsheet entry. A positive amount was included when a zero or negative value was expected, leading to an $7.9bn (£6bn) over-reporting of the bank’s dollar liquidity position.
The potential size of the error was $10bn, according to the PRA, which would have resulted in Standard Chartered breaching the regulator’s liquidity requirements.
The PRA found that the bank launched an internal investigation into the error, but did not inform the regulator until four months later.
The watchdog said the delay in giving notice meant Standard Chartered had “failed to be open and cooperative”. It also found that the lender’s internal controls and governance arrangements concerning its regulatory reporting of its dollar liquidity were not implemented or operating effectively.
Standard Chartered said it accepted the PRA’s findings related to dollar liquidity reporting errors, and also accepted that there was a delay in notifying the PRA about one of the errors while an internal review took place.
The bank said in a statement: “Standard Chartered has cooperated proactively and fully with the PRA’s investigation and has made significant improvements to and substantial investment in its liquidity and regulatory reporting processes and controls and remains committed to accurate regulatory reporting.”
Standard Chartered qualified for a 30% reduction in the fine by agreeing to resolve the matter with the PRA. Without the discount, it would have been fined £66.5m.
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