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More and more clicking on to what's really going on here
Regulators had to approve the last deal and they might not be keen on sole foreign ownership which might be the reason it wasn’t taken off the market last year.
Metro Bank need to work on the narrative and more than likely dispose of the current CEO who is out of ideas. Then cut, cut, and cut some more until the bleeding stops. Then find some growth levers.
Someone will probably make a fortune out of Metro, however when there's a controlling overseas shareholder I doubt it will be the other shareholders, which is why I'm not tempted to buy a load more. My guess is these will be taken out at about 35p in a year or two with his sweetening a deal for his favoured shareholders and I along with many others will crystallise a big loss. Mistake I made was when I saw the rights issue at £5 a few years ago that those shareholders would come out ok. Fortunately I sold half at a small loss at just over 150p in Feb last year but bought more at 50p in October.
Daniel Frumkin even
They both need to do something major or going to have egg on their faces thinking they got a steal at 30p
Might get some cheaper than D Franklin & Gilinski
🤣🤣
No more than D Franklin deserves
Good old Metro another all time low
I will share your thoughts with Gilinksi see what he thinks...maybe he's scheming to get the other half for like 20p or lower!
I'm sure he will not like 2nights sp close
He could well be.
Chatbot2
"Even then i doubt i will recover my money, but hopefully some of the 3,000 current employees wont be joining the 1000 poor soles joining the dole queue this month because a wholly incompetent management team has been allowed to run amock"
"Even then i doubt i will recover my money"
Key sentence so despite all your opinions you didn't listen and take your own advice and either a) don't invest, or gamble, whatever term you prefer in Metro Bank b) didn't short the stock or c) exit minimising losses.
Very convincing story since your account was only created 'Member Since 11th Oct 2023'.
So now sounding out what others should be aware of you have fallen foul of the exact same issues...
If you were smart enough you would have seen the challenges and impact of the Bank of England's decision to reject Metro Banks internal credit allocation methodology and how that would play out...but by your own admission you are blaming the mgt team yet with foresight rather than hindsight you wouldn't of invested, correct?
I will share your thoughts with Gilinksi see what he thinks...maybe he's scheming to get the other half for like 20p or lower!
Err- interesting Maths. You would gave spent £150m on owning a 52% share of a business now valued at £236m
Concise enough?
Chatbot2
"My final point is that you and others presenting people like me and other sensible posters as shorters is itself a bit silly. If i wanted to short this stock i would have talked up the year end performance"
Nope, if you had been watching the real shorting action was from 4000p down to double digits, from 2019 onwards...but you wern't here then were you?
Lol...well said btw!😅🤣😂
If only I had £103m on top of the original £50m I have spent already investing in Metro Bank I would be a millionaire already...
I've got Gilinksi, well actually Dora on speed dial so will pass on Chatbox2 comments that he's doomed and stick to pulling up parsnips for a living while Cyberpuppy will not doubt email her at least 550 times for the next 5 year's conferring similar...
I really hate it when succesful billionaires turn up having done absolutely no research and just throw darts randomly and blind folded at barn doors!
Just for all the stragglers struggling to keep up with our soap....my unbiased review of the week !
Mortuary dodger says keep the faith peeps, still much to come ...
Son of natter box opines ( albeit non-concisely) to the contrary we are probably doomed !
And Space Pup feels frankly a bit ignored (since Mortuary dodger got a new adversary), but is sticking to guns and reluctantly confers with Son of nattering, but more concisely ...
The own goals were all intentional to drive the price down
My final point is that you and others presenting people like me and other sensible posters as shorters is itself a bit silly. If i wanted to short this stock i would have talked up the year end performance, focusing on the actually meaningless statutory profit in the hope that the market was stupid enough not to see through it. I would then have a decent downside when management announce their £50m underlying loss in the half years. Because, as i said, 30p a share implies the market believes the bank needs more equity. So i wouldn't be shorting at 30p- or if i was, i would be putting it out there that the bank is insolvent- which it definately isn't. Its just zombiefied until decent management get us a decent transaction. Even then i doubt i will recover my money, but hopefully some of the 3,000 current employees wont be joining the 1000 poor soles joining the dole queue this month because a wholly incompetent management team has been allowed to run amock
TGTD
You seem to misunderstand much of what i am saying. Assuming you are writing in good faith, i will take the time to address the points
a) I do not deny that it has been put out there that Coventry are willing to pay £800m for Co-Op. I am saying they would be ill advised to pay >80% of tangible book for a business that was at peak profitability last year (this year's PBT at Co-op is £60m lower than last) and whose franchise is in decline. My point is that if Coventry is wanting to buy a current account franchise, paying less than half what it is offering for Co-op for Metro should be a no brainer. Why aren't they doing it? Because Metro's management team have failed to produce a credible value case, and because of their mismanagement the bank is perceived by most in the market as a basket case
2) Galinski's actual track record is based on turning around the largest (previously) publicly owned bank in Colombia. Impressive though that is, taking a poorly performing bank in a developing market and using it as a consolidation vehicle to strip out costs is a very different prospect to building a successful challenger bank in arguably the worlds most competitive banking market. Particularly when consolidating current account platforms in the UK has been the rock on which many mid-sized banks and consolidation cases have foundered. Its not impossible, but would have been more impressed if the cost cutting felt well considered and tackled the additional costs that Frumkin has put on in recent years. Instead its the core revenue drivers of Ratesetter and branch based deposits that have faced teh chop. The strategy of his incompetent farm boy CEO seems to be to switch into higher risk commercial lending (which he has been rolling off since 2019) funded by deposits costing above base rates (cannibalising all the low cost deposits that the model was built to bring in). Its stupid banking 101. If Galinski had any real nouse his first action would have been to replace the management team. But what he has instead allowed is for the CEO to fire the second sacrificial scapegoat CFO in three years t omask his own incompetence, thereby staying loyal to the man who enabled him to buy in at 30p when a month before it would have cost £1.30p
3) The £16m loss is an issue because it was a £16m profit at the half year. So it is as i said a £10m a month loss for the last quarter. I agree that is before the cost reduction kicks in. But even if revenue stayed flat, the cost reduction doesn't fully cover that £10m a month. And the revenue line was £25m lower in H2 than H1 because of the deposits issue which will atleast persist at current levels if not get worse. The CEO himself admits that they are going to lose money in 2024. He just hasn't been transparent on how much.
Chatbox1
'the Co-operative Bank, which had been offered £270m by Cerberus in 2020, could now reportedly fetch upwards of £800m if it were to be sold.'
htTps://www.theguardian.com/business/2023/dec/21/co-operative-bank-in-merger-talks-with-coventry-building-society
Sky News if I recall quoted similar valuations.
SDB revenues are in fact an important point as this covers 80% of property leases costs and possibly higher as Metro Bank acquired outright some London prime sites during the Covid period.
"I am not sure i have the energy to unpick your points about Galinski's strategy"
It's perfectly rational to understand his strategy and background in financial services with turnaround strategies often targeted at cost cutting and operational improvements. From there you see his view on the 'value' proposition that Metro Bank offers and likely exit strategy, cost reduction, rebuild share price, gradually lowering his share holdings as market confidence recovers, and sell Metro Bank on 2 to 3 years for a multiple of his current average share price of 70p.
If Metro Bank can operate at a cost base of £450m while revenues are currently are £546m isn't that an underlying profit of £96m that you are suggesting?
The current loss £16m versus prior year loss is modest it was just that the market expected a small profit of £11m rather a small loss but given last years tirmoil I wasn't surprised, and the £30m statutory profit should have been the key highlight...
The market focused on the small underlying loss only and not the wider picture that despite last years refinancing, subsequent share dilution, the turn around strategy continues and is being both expanded ambitiously and accelerated in its delivery. Which is exactly the right course of action to take.
One could equally argue that challenger banks face an unfair regulatory environment shackled with not being able to utilise their own internal risk weighting models for capital allocation while the big four banks can and do enjoy an unfair competitive advantage.
In fact last year's crisis was imho driven directly by the Bank of England preventing Metro Bank moving to its own capital allocation model and reducing capital buffers in line with its much larger rivals meaning it wasn't therefore able to free up further capital, lend more, and strengthen its balance sheet, through generating more profits, which in turn created a mini market panic, all avoidable in my opinion.
"Most must have come to the conclusion that you cant just asset strip this business (because of the unexitable costs associated with running a branch based current account business)."
Well Gilinksi doesn't think so and nor did the previous bidders otherwise why bother engaging with Metro Bank in a bid process if it wasn't feasible to grow margins through reducing the cost base.
I'm not sure if I can follow your other points they seem to be random outbursts aimed at denigrating the Board.
The safety deposit box point is a complete red herring. Its worth less than £20m of revenue. When the s, the branches had not had time not build a deposit base so had very little other annuity income and the overall cost base was less than £200m it was a very meaningful part of the story. Now Frumkin has grown the cost base to £530m, while shrinking the balance sheet, much less so.
I am not sure i have the energy to unpick your points about Galinski's strategy. All i will say is that clearly every serious PE business as well as other mid-sized banks have been having a look at Metro and had the opportunity to take the business out at or around 30p (i bet the regulator would have taken the arm off any of teh big 5 willing to take the bank on for free). Most must have come to the conclusion that you cant just asset strip this business (because of the unexitable costs associated with running a branch based current account business). The only value comes from the fact that Metro was the only mid-sized branch based bank able to grow low cost deposits. That is what Shawbrook were interested in. Galinski is trying, with this slash and burn, to present a picture of the bank as one which still has a successful core franchise, which can operate at a cost base of less then £450m. But i doubt people will buy that. He is killing teh core business so what you end up with is infact, a bank even more discredited than the co-op of 5 years ago that is much less profitable (Co-p is worth nowhere near £800m BTW but Coventry may be the type of Bluebird buyer we wish the Metro management team had the capability to unearth, but they cant tie their own shoelaces let alone present a credible sales pitch to the market.)
M3Leki
Operating 7 days a week is too expensive a business model and no doubt there has been some decline in SDB revenues, but then again your branch closed so couldn't have been viable to remain openveven with SDB revenues.
Both Virgin Money and The Co-operative Bank are profitable and operate a similar size bank branch and digital model to Metro Bank. Cooperative Bank 50, Metro 76, Virgin Money 91 branches.
Hence it appears that Metro Banks cost base is not aligned to the mid sized bank sector industry average and needs rescoping..job cuts, branch closure of unprofitable branches, and automation of bank back office processes.
Hence the initial £50m savings to be delivered in Q1 and a further £30m this year.
If you caste your mind back The Co-operative Bank was more or less written off given the issues it faced but now valued at £800m, is profitable, and in merger talks with Coventry Building Society havingvrejected several other suitors. The Co-operative Bank now makes £477m revenues with an underlying profit of £120m versus Metro Banks £546m revenues and underlying loss of £16m yet Metro Bank has double the customers of the Co-operative Bank at 2.7m versus 1.4m. While Virgin Money has 6.6m customers, revenues £3.6b and underlying profits of £900m but has more branches than Metro Bank.
There in lies the key issue Metro Banks cost base is out of kilter with its rivals and needs realignment and thats fundamentally why it is currently loss making.
Realign the cost base, profits follow, capital adequacy improves, balance sheet strengthens, and share price re-rates.
Gilinksi has a strong financial services background in cost cutting turn around strategies and no doubt saw the opportunity both to cut costs butvalso the growing M&A activity in the UK mid sized bank industry where there is strong competition. Seeing Metro Banks popular brand name and popularity amongst customers added to his analysis.
Cost cutting and right sizing of any business takes time, upfront one off costs to deal with, followed by the year on year savings to follow..I see Metro Bank as a clear turn around opportunity, which will remain listed, and no doubtvsikd off in 2 to 3 years to a bigger bank player.
@2good
Your analysis on the SDB is outdated. They were covering the lease costs but not anymore. People took all their items out and people no longer use the SDB to the extent of a year ago.
Branch opening hours has removed the USP and for people to only view their items mon-fri 9-5 is not as appealing as 7 days a week and up to 8pm.
I worked at the Earl’s Court branch and that was paying for itself and was a free advertising due to being on the A road. Not anymore and that branch has now been closed.
You need to re-think your analysis.
Chatbot2
I notice in your analysis you haven't taken account that Metro Bank is a well known brand name and popular with customers.
That the branch lease costs are 80% covered by security box rentals while sone prime site locations are owned outright.
That Metro Bank has 2.7m customers, The Co-operative Bank 3.1m, and Virgin Money 6.6m all operate a branch structure as well as a digital offering. Note: The Co-operarive Bank has been valued at £800m in its merger talks with Coventry Building Society.
Metro Banks cost structure needs to be brought down and into line with the mid size bank sector. Achieve that and the issues you raise regarding profitability and capital erosion fade away..making Metro Bank an interesting take over target.
Hence the core issue that Gilinksi is addressing is getting the banks cost structure right sized and it seems that's what he is focused on achieving.
Cyberpuppy
"Oh wait though, all these savings that we know are coming will substantially affect the share price, again lol. If it was going to it would have already, and as we've seen this week, surpassing market "expectations", again laughable because the "market" was proactive investors lol,"
The mgt team can claim whatever future savings they like, but delivering them is another matter, if delivered by Q2 and reflected by trading updates then the share price will react positively on the news based on the next set of financials.
Hence your argument that future savings are already 'baked' into the current share price is 'groundless'. .
Metro Bank made a small £11m operational loss and much of which was driven by the refinancing costs and upheaval in October last year. A 67% improvement on prior year I note.
Going forward it's on far sounder ground and with £80m of potential future savings flowing to the bottom line in the coming months the share price is more than likely to gradually recover if not sharply re-rate upwards.
Chatbot2
Connectivity issues as advised earlier.
What happened to 'Chatbox1' did that get banned?
Errr- and i was referring to your illiteracy- but it would appear your sense of irony is as acute as your investment acumen!