Doubt over Manchester Building Society’s long term prospects after court ruling
The “long-term prospects” of Manchester Building Society were in doubt this afternoon, following a court hearing.
On May 2, the High Court awarded damages of £335,727, including interest, to the Society regarding a case related to audit services provided by Grant Thornton UK, former auditors of the Society.
The Society admitted this was “considerably below” the £49m it had claimed.
It also warned that it could also face costs relating to the case, to be determined at a hearing this month.
Following the hearing today it revealed that it has been granted leave to appeal the High Court decision.
But it also confirmed this afternoon that the High Court awarded interim costs to Grant Thornton.
It said: “The amount of interim costs payable will be calculated in the coming days, and the Society expects to confirm this figure next week.
“In addition to the interim costs, the Society anticipates that it will have some further liability in respect of Grant Thornton’s overall costs which will be determined following a detailed assessment that is expected to take some months.”
It went on: “As set out in the results for the year ended 31 December 2017, the Society met its Individual Capital Guidance (ICG) in total capital terms, but not the requirement for the level of Common Equity Tier 1 (CET1) regulatory capital.
“The Society’s understanding is that the impact of the interim costs award will mean the Society will not meet a regulatory requirement to hold 4.5% of CET1 capital against risk weighted assets (the ‘4.5% requirement’).”
The statement said: “The Society is discussing with the Prudential Regulation Authority (PRA) the consequences of not meeting the 4.5% requirement, including any actions to be taken by the Society, and any steps that may be taken by the PRA.
“The Society, therefore, continues to discuss and consult with the PRA on the future strategic and capital position of the Society.”
It added: “The outcome and timing of the regulatory process is uncertain.
“There continues to be material uncertainty regarding the Society’s long term prospects.”
But the statement concluded: “The Society continues to have a strong liquidity position.”
