Rumours of severe trouble at the challenger bank have badly rattledcustomers. It's the latest episode in a sorry saga. Matthew Partridge reports.
Metro Bank shares have plunged to another record low. While the bank was trumpeting a £350m share sale to repair its finances, it was hit by social media rumours over the weekend that it was about to implode. This prompted some customers to rush to their branches and demand their cash was returned to them. The bank admits there have been "increased queries" about access to safe deposit boxes used tostore valuables.
It's "absurd" for people to queue outside Metro Bank branches for their money and valuables, says Jim Armitage in the Evening Standard. Not only is savers' money protected up to £85,000, but it would be a "grievous criminal offence" for a bank "to go looting customers' Patek Philippes and gold bars from the vaults". Still, you can't really blame them, since "the way this bank has been mismanaged is enough to spark alarm in anyone". Not only has it "botched" its loan accounting, resulting in it being undercapitalised, but it compounded the problem by incorrectly claiming the error was spotted internally rather than by the Bank of England.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Metro Bank is not another Northern Rock
If Metro Bank is really determined to get its act together, it can start by making some changes at the top, says The Guardian's Nils Pratley. Indeed, after all the market turmoil, it's "ridiculous" to think "the entire board can carry on regardless". If chief executive Craig Donaldson is deemed "too important to operations" then a new external chairman "is a minimum requirement". Certainly Vernon Hill's behaviour, including controversies related to his wife's business, must surely be "trying the patience" of the "US fan club" Hill built while running Commerce Bank. The mood would certainly improve if he "agreed to spend more time withhis Yorkshire terrier".
After the £350m share issue, Metro Bank's market value "will be less than half its beefed-up equity base of £1.75bn", which represents a "potentially alluring" discount for new investors, according to Aimee Donnellan for Breakingviews. But to deliver a decent return on equity, the bank will have to quintuple its income from current forecasts. This will be a struggle given an "increasingly competitive" mortgage market, while the press coverage of "anxious customers" could "deter new depositors".
-
Pension savers could get £6,000 boost under ‘megafunds’ plans, government saysReforms are underway to get workplace pension schemes investing more in the UK
-
The ten most expensive neighborhoods in London – do you live in one?Homeowners in London are no strangers to seeing high property prices but some prime areas are far more expensive than others. We take a look at them
-
Forget the financial crisis: it’s time to bet on British banksCover Story Over a decade after the financial crisis, investors are still reluctant to consider British banks. But their worries are overblown and the stocks are cheap, says Matthew Partridge.
-
If you’d invested in: Metro Bank and Hikma PharmaceuticalsFeatures In 2010, Metro Bank was launched as Britain’s first new high-street bank in over 100 years. In the last year the share price has risen by more than 110%.
