LYG Lloyds Banking Group Plc

By Adam Clark

Lloyds Banking Group PLC's (LLOY.LN) Bank of Scotland arm has been fined 45.5 million pounds ($57.3 million) for failing to disclose information about suspicions of fraud at one of its branches.

The U.K.'s Financial Conduct Authority said Friday that Bank of Scotland failed to alert regulators and the police about suspicions of fraud at its Reading branch, delaying the subsequent investigations.

"There is no evidence anyone properly addressed their mind to this matter or its consequences. The result risked substantial prejudice to the interests of justice, delaying scrutiny of the fraud by regulators, the start of criminal proceedings as well as the payment of compensation to customers," the FCA said.

Lloyds has already paid out more than GBP96 million pounds in compensation to customers who were victims of fraud by staff at HBOS Reading between 2003 and 2007. Lloyds acquired HBOS in early 2009 and the FCA said its investigation focused on actions prior to the deal.

The regulator said HBOS first identified suspicious conduct in early 2007 but failed to understand the significance of the situation and only provided full disclosure in July 2009, which subsequently led to a criminal investigation. Six individuals were convicted in 2017.

Bank of Scotland received a 30% discount on its fine in exchange for early settlement, which would otherwise have led to a GBP65 million penalty.

Write to Adam Clark at adam.clark@dowjones.com; @AdamDowJones

(END) Dow Jones Newswires

June 21, 2019 05:00 ET (09:00 GMT)

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