Metro Bank loan blunder perplexes industry
Bankers surprised risk-weight errors went unnoticed, warn they could harm bank’s IRB aspirations
Bankers are struggling to understand how the UK’s Metro Bank misclassified billions of pounds in commercial real estate and buy-to-let property loans for capital-allocation purposes, resulting in a 40% plunge in the share price of the UK challenger bank when the error was announced last week.
The bank is still using the standardised approach to credit risk, meaning all loans of a particular type are assigned a set risk weight, which removes the possibility of modelling errors that can affect
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