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The former chief executive of Metro Bank says he has been made “untouchable”, advised to move to Australia and even had trouble opening bank accounts after the UK regulator accused him of misleading investors over a £900m accounting blunder.
Craig Donaldson, who resigned in 2019, told the upper tribunal in London that both his career and personal finances had suffered as a result of the Financial Conduct Authority’s (FCA) 2022 ruling.
Both Donaldson and Metro Bank’s former chief financial officer, David Arden, are challenging the ruling – which includes fines of £223,100 and £134,600, respectively – in an eight-day hearing at the upper tribunal in London that continues this week.
The regulator claims he allowed Metro Bank to publish inaccurate financial information to investors in late 2018, particularly about the amount of risk the bank was taking on loans and mortgages.
By 2019, it was revealed that Metro Bank has misclassified £900m of loans as less risky than they actually were, meaning it breached rules that require banks to hold enough capital to cover potential losses. Its shares plunged nearly 40%, and the panic sparked a mini-bank run, with business customers pulling £235m and account holders queueing to withdraw cash and empty safety deposit boxes. Donaldson resigned later that year.
However, Donaldson, 52, denies the FCA claim that he knowingly published inaccurate financial information months earlier.
“It is simply not correct, as the FCA alleges, that both the bank and I were aware at the time that the size of any adjustment would be substantial,” Donaldson said in his witness statement.
He also says the allegations have ruined his career.
“I … should be at the peak of my earning capacity, and my career trajectory should have seen me continuing in significant leadership roles. I have been unable to find a permanent role,” Donaldson said in the statement. Instead, he had only managed to secure “interim, transient” jobs offering a “fraction of my previous earnings”.
“I have been informed on many occasions that the innuendo and the fear of the FCA’s likely approach to me holding a senior, authorised position has effectively made me untouchable for a permanent role in the market”.
“I have variously been advised by headhunters to move to Australia, or to try and get a job in a different industry beyond the regulated banking sector where the FCA’s influence will not directly or indirectly impact my prospects,” his witness statement said.
Donaldson said that the ruling had also affected his personal finances. “There is also a wider impact that cannot have been intended by the FCA. Applying for simple things like home insurance, bank accounts and credit cards has been negatively impacted.”
“I have had difficulty opening bank accounts and buying financial products,” Donaldson said, adding that some firms that asked about the FCA ruling had “declined to offer cover”.
“Obviously this has a wider financial and reputational impact beyond what the FCA seeks to characterise as nothing more than a fine in respect of conduct at the lower end of the scale of seriousness.”
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Donaldson is hoping to overturn the ruling; arguing that Metro Bank had followed legal advice, that he was in proactive communication with the board, and that the Bank of England’s Prudential Regulation Authority – which supervises financial stability – had been aware that Metro Bank was having trouble calculating the risk on its loan books.
He also claims the FCA was “too busy” to appoint a dedicated team to supervise the growing bank. “The Bank requested this on numerous occasions,” Donaldson said. Metro Bank was instead routed to a call centre.
“The FCA said they were too busy and that they would continue to get our information from the PRA where necessary. We were the seventh-largest bank at the time,” Donaldson said in his witness statement.
“In lieu of a supervision team, the Bank’s contact with the FCA was conducted via the FCA’s call centre.”
The FCA and Donaldson’s legal team declined to comment.
The eight-day court hearing continues next week.
