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.
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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".
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