Metro Bank Fined £17M for AML Failures; Mediobanca Shares Plunge on Revenue Drop
Metro Bank Fined £17M for AML Failures; Mediobanca Shares Plunge on Revenue Drop
The financial world saw a mix of accountability and turbulence this week as Metro Bank faced a significant fine for anti-money laundering (AML) control failings, while Mediobanca’s revenue miss sent its shares tumbling. Here’s a breakdown of these critical developments and their implications for the banking sector.
Metro Bank Penalized £17M Over AML Control Failures
The Financial Conduct Authority (FCA) has imposed a £16.7 million fine on UK challenger Metro Bank for its prolonged failure to address issues in its automated AML system. The system, implemented in 2016, faced internal warnings from junior staff within two years of its launch, but the problems persisted until 2020.
“Metro’s failings risked a gap being left in our defence against the criminal misuse of our financial system,” said Therese Chambers, joint executive director of enforcement and market oversight at the FCA. “Those failings went on for too long.”
The penalty, reduced by 30% for early cooperation, comes amidst the FCA’s intensified scrutiny of challenger banks, following a £29 million fine on Starling Bank earlier this year.
Metro Bank’s CEO, Daniel Frumkin, expressed optimism about moving forward:
“The conclusion of these enquiries draws a line under this legacy issue, allowing the bank to move forward and fully focus on the future.”
In a positive turn, Metro Bank reported a return to profitability in October, driven by a pivot towards higher-yielding specialist mortgages and commercial lending. The bank’s shares rose 3.4% in early trading following the announcement.
Mediobanca Shares Drop After Revenue Miss
Meanwhile, Italian investment bank Mediobanca saw its shares plunge by 7% after missing revenue forecasts and revising its full-year net interest income (NII) outlook.
Revenues for the quarter totaled €865 million, falling short of the €884 million average analyst forecast. Despite a 29% surge in net fees to €231 million, first-quarter net profit declined 6.1% year-on-year to €330 million, though it beat the €319 million consensus.
“Mediobanca net profit was 3 per cent better than consensus, but the beat is mainly coming from lower tax, lower loan loss provisions,” Citi noted in a research report, adding, “We expect some initial weakness driven by lower core revenues.”
Mediobanca CEO Alberto Nagel provided insight into the bank’s strategic shift:
“NII is now expected to remain flat for the fiscal year as the bank shifts focus to growing financial assets by attracting deposits amid high but declining interest rates and historically low loan spreads.”
Intesa Sanpaolo Expands Digital Wealth Management
In contrast to Metro Bank and Mediobanca’s challenges, Italian banking giant Intesa Sanpaolo continued its push for innovation, announcing a partnership with BlackRock to offer digital wealth management services through its private banking unit, Fideuram, in Belgium and Luxembourg.
“This agreement is a perfect fit with our strategy based on the growth of our wealth management business and the development of new digital solutions,” said Intesa CEO Carlo Messina.
Intesa has heavily invested in technology to drive growth, launching Fideuram Direct last year to attract younger clients. Messina emphasized that the bank’s focus remains on organic growth and technological innovation, ruling out domestic acquisitions due to antitrust constraints.
Key Takeaways
- Metro Bank: Faces reputational challenges but shows signs of recovery with a focus on specialized lending.
- Mediobanca: Must navigate declining core revenues while maintaining profitability through strategic adjustments.
- Intesa Sanpaolo: Positions itself as a leader in digital banking and wealth management, leveraging partnerships and tech investments.
The latest developments highlight the varying fortunes of Europe’s financial institutions as they grapple with regulatory, operational, and market pressures in an evolving financial landscape.
