The Bank of England has said it would have fined Sanjeev Gupta-connected bank Wyelands more than £8.5 million for a plethora of failures at the winding-down lender.
Wyelands was far too exposed to just one client in the form of Gupta’s group of companies – which bought the bank in 2016 – the Bank of England’s Prudential Regulation Authority (PRA) said on Tuesday.
It also failed to properly archive WhatsApp messages, did not have proper risk management strategies, or comply with its own policies to mitigate potential conflicts of interest over its links to the Gupta Family Group Alliance (GFG).
Wyelands was, however, able to avoid the fine because it is being wound down.
The PRA said Wyelands has “very limited financial resources” and that fining the business “would not advance its general objective to promote the safety and soundness of firms”.
Wyelands joined the GFG Alliance – a loose collection of companies linked to steel and commodities tycoon Sanjeev Gupta – in 2016.
But three years later the PRA said the bank had to limit its exposure to GFG, which had come to represent more than a quarter of Wyelands’ eligible capital.
It is the first time that the PRA has taken action against a company for breaching the large exposure limits that banks are subject to.
“The PRA expects firms to establish and maintain effective governance and risk management controls at all times,” said PRA chief executive Sam Woods.
“This is particularly important where a firm engages in complex transactions or where a significant proportion of its business is introduced by its wider group.
“Wyelands’ wide-ranging and serious failings resulted in the PRA taking swift supervisory action to minimise the risk to depositors and issuing today’s strong censure.”
Wyelands Bank chief executive Stephen Rose said: “The board of Wyelands Bank has been committed to working constructively with the PRA throughout its investigation, and welcomes the matter being drawn to a close.
“The board is grateful to the dedicated team of employees and advisers who have worked to protect depositors and support the bank throughout the investigation.”
GFG Alliance said: “Wyelands Bank’s shareholder has done what it can to support the PRA through this process and notes the PRA’s findings.
“The shareholder has injected significant funding into Wyelands Bank so all depositors were repaid in full, ensuring that none of Wyelands’ depositors suffered losses.
“The shareholder has also provided funding to ensure Wyelands Bank continued to operate in order to allow the regulatory process to be completed and for the bank to conclude its solvent wind-down.”
By August Graham, PA Business Reporter