UK watchdog fines Bank of New York Mellon $185 million

Wed Apr 15, 2015 6:25am EDT
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By Huw Jones

LONDON (Reuters) - Britain's markets regulator has fined Bank of New York Mellon (BK.N: Quote) 126 million pounds ($185.30 million) for failing to keep customer money safe during the financial crisis.

The Financial Conduct Authority (FCA) said on Wednesday the fine was levied on Bank of New York Mellon's London branch, and on Bank of New York Mellon International Limited for breaches that spanned nearly six years from November 2007 to August 2013.

Bank of New York Mellon is the world's biggest custody bank, whose business is looking after financial assets such as stocks and bonds for customers.

The collapse of Lehman Brothers in 2008 prompted UK regulators to check that custody banks like BNY were complying with safe keeping rules as markets went into meltdown globally.

"The firms' failure to comply with our rules including their failure to adequately record, reconcile and protect safe custody assets was particularly serious given the systemically important nature of the firms and the fact that safeguarding assets is core to their business," Georgina Philippou, acting director of enforcement and market oversight at the FCA said.

BNY, which had $28.5 trillion of assets under custody globally at the end of 2014, said the fine was fully covered by pre-existing legal reserves and no clients suffered any loss as a result of the issues identified by the FCA.

A bank said it had undertaken a broad internal review with the assistance of outside accountants and legal advisers which has led to new and improved policies and operational procedures.

"We regret in this case that we did not meet our standards or those of the FCA," the bank said.   Continued...

The Bank of New York Mellon Corp. building at 1 Wall St. is seen in New York's financial district March 11, 2015. REUTERS/Brendan McDermid