The Prudential Regulation Authority (PRA) has fined Standard Chartered Bank (SCB) £46.55m for failing to be “open and cooperative” with the PRA and for failings in governance.

The fine relates primarily to PRA liquidity expectations of SCB and is the highest ever imposed by the PRA in a PRA-only enforcement case.

Standard Chartered's current group head of conduct, financial crime & compliance is Tracey McDermott, who worked at the FCA for 15 years prior to joining Standard Chartered. She became acting CEO of the FCA in 2016 shortly before leaving the organisation. She joined Standard Chartered in March 2017 and became group head, corporate affairs, brand and marketing and group head, compliance in March 2018. 

The PRA, part of the Bank of England, regulates 1,500 large banks and insurance companies.

In October 2017, the PRA imposed a temporary additional liquidity expectation on SCB in response to concerns about heightened risk of US dollar liquidity outflows.

While SCB’s overall liquidity position remained in surplus, between March 2018 and May 2019, SCB made five errors reporting liquidity which meant the PRA did not have a reliable overview of SCB's US dollar liquidity position, the PRA said.

The temporary expectation has now been removed. 

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. SCB’s identification of this issue was information which the PRA "reasonably expected" to be notified about promptly. The PRA said the delay meant SCB failed to be open and cooperative in breach of Fundamental Rule 7.

Sam Woods, deputy governor for prudential regulation and chief executive 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.”

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.

The investigation found a number of failings at SCB including failing to promptly notify the PRA of one of the miscalculation and misreporting errors and ensuring that it had appropriate human resources to investigate potential misreporting of the liquidity metric.

SCB agreed to resolve the matter and qualified for a 30% reduction in the fine imposed by the PRA. Without the discount, the fine imposed by the PRA would have been £66.5m. 

• PRA Final Notice to Standard Chartered