BoE finds weaknesses in small bank risk controls

Metro Bank

The Bank of England has found smaller banks are consistently failing to properly estimate potential losses, raising questions on the effectiveness of current regulatory standards.

Melanie Beaman, the BoE’s director for UK deposit-takers supervision, wrote in a letter to chief executives last week that risk modelling at smaller banks was consistently “overly optimistic” and that standards may have to be tightened.

The letter came after a review of fast-growing new UK banks and deposit-takers,

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