February 9, 2017 / 10:38 AM / 8 months ago

UPDATE 1-BoE fines Mitsubishi UFJ units for poor communication

(Adds more detail)

By Huw Jones

LONDON, Feb 9 (Reuters) - The Bank of England has fined two units of Japanese bank Mitsubishi UFJ Financial Group a record 26.77 million pounds ($33.62 million) for failing to tell the British regulator about a U.S. enforcement case.

It is also the first enforcement action by the BoE’s Prudential Regulation Authority (PRA) against a bank for failing to be open and cooperative with the watchdog, and for breaching systems and control rules.

“We expect all firms to be open and straightforward in their dealings with the PRA. Where firms fall short of this expectation, we will enforce it,” Sam Woods, BoE deputy governor and PRA chief executive, said in a statement on Thursday.

The PRA fined Bank of Tokyo-Mitsubishi UFJ Limited (BTMU) 17.85 million pounds, and broker arm MUFG Securities EMEA PLC 8.925 million pounds.

It said both had failed to be open and cooperative with the PRA about an enforcement action into BTMU by the New York Department of Financial Services (DFS).

The Bank of Tokyo-Mitsubishi UFJ was fined $315 million in 2014 for pressuring a consultant to water down a supposedly objective report on BTMU’s dealings with sanctioned countries, submitted to DFS, thereby misleading regulators, the PRA said in a statement.

The DFS enforcement action had implications for the then chair of MUFG Securities, it added.

The two banks did not inform the PRA of the DFS action until after the DFS’ public announcement.

“BTMU’s inadequate systems and controls for the communication of relevant information contributed to this failure to be open with the PRA,” the watchdog said.

BTMU and MUFG Securities EMEA said in a statement they regretted the “historic breaches” and had fully cooperated with the PRA’s investigation.

“MUFG has taken decisive action to improve its information controls and intra-group communication on regulatory matters. MUFG is committed to conducting business with the highest levels of integrity and regulatory compliance and to continuing to improve its policies and procedures,” they said.

Fines levied by U.S. regulators in recent years have been so large that they have raised questions about whether the banks being punished have enough capital - a key concern for the PRA.

The PRA’s penalty would have been 30 percent higher had the two firms not agreed to settle at an early stage.

The PRA said that since 2014, BTMU and MUS (EMEA) have developed and implemented measures to enhance the sharing of information relating to regulatory investigations and other matters of regulatory interest.

$1 = 0.7964 pounds Reporting by Huw Jones; editing by Rachel Armstrong and Jason Neely

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