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https://www.wsj.com/articles/coronavirus-made-america-s-biggest-banks-even-bigger-11587639602
No point attracting new deposits and creating the interst paying liability when there are few attractive ways to earn a higher return and make a margin. So they have tp cut rates to preserve margins.
The big banks however will have seen a flood of deposits into current accounts earning 0% interest. They'll be smiling.
https://www.hl.co.uk/news/articles/households-are-saving-200-more-during-lockdown,-but-are-they-getting-a-good-deal
Pace of deposit growth slowed dramatically in Q1, and they said it was only 'stable' in April. Hardly sounds like a flood of deposits comong in.
What has changed between April and June to suddenly drive inflows of deposits to Metro that it is having to fight them away??
Jinny I think their deposit book would have increased. In the Q1 trading update they said their deposits in April were stable. Subsequent to this they have reduced their 1 year rate from 1.2% to 0.8%, they are no longer in the top 10 best list. This means they are moderating and trying to slow their deposits. So I am not expecting them to show a reduction in deposits at H1 next month.
H1 results should be around 23rd/24th July.
It is hard not to see them report a reduced deposit book.
And if that happens, Shorts are havin a party!
Theo, so over a year the base rate has decreased by 0.65% but the delta in the savings rate has been 1.1%?
Tombo13.
That too, but the bulk of short positions was built pre Covid.
Covid resurgence is convenient cover for a smash and grab with no fear of risk of sustained upside.
Could it be as simple as shorters expecting a resurge in COVID-19 and increasing based on that?
Just making an objective assessment of the facts.
Its clear Shorts are increasingly confident of a bad FCA finding. Such a finding will open the flood gates to fines and class action lawsuits which could devastate the equity holders.
The bank will be fine and will carry on with regulators help / protection. But equity investors could see carnage.
And with the latest change at the top of the FCA taking effect from September this year, a resolution may now not come until Q2 2021 given covid and imminent Brexit disruptions.
Those are the objective picture, and can explain the shorting activity here.
Think about it, who holds 4.4% of a company's issued share capital as short bet and keeps increasing despite a 95% SP collapse already???? A VERY confident and well informed shorter imho.
Either short or haven’t got a clue about volume and accumulation in recent weeks. Both scenarios being absolutely fine.
Jinny, didn’t know you worked City and know exactly what was on every potential partner/ acquirer’s mind.
Good on you ;-)
Absolutely no one will touch this via acquisition for many reasons.
Huge risk of embarassment through spike in bad debts, adverse FCA ruling, potential liabilities from the current US class action lawsuits, poor PR of making job cuts in middle of a global pandemic etc etc
Whatever any acquirer hopes to gain could be lost very quickly many times over!
" If another bank acquired them the synergies would be immense. £200m, plus if that bank has AIRB then they can become more thinly capitalised they would be able to generate another £150m of profits. "
yes. plus re-fin the MREL. boom. easy.
The problem is the head office costs, where 2,000 people are employed. They have their head office and call centres in London. All those expensive London salaries and rents need to be somehow paid for.
If another bank acquired them the synergies would be immense. £200m, plus if that bank has AIRB then they can become more thinly capitalised they would be able to generate another £150m of profits.
It is crazy that there is no other bank willing to come forward and take this wreck on.
Card Factory: £450m revenue vs. £400m Metro
Card Factory: 1000 stores vs. around 77 Metro
Card Factory: 10,000 employees vs. 2,800 Metro
Card Factory: Selling cheap paper cards vs. up to 7 figure mortgage offerings at Metro
How in hell does Card Factory generate substantially more profits than Metro????
In fact Metro is heavily loss making. While in a disastrous year which saw their CEO sacked yesterday, Card Factory delivered £67m pre tax profit.
Thete's a hell of lot more to Metro's issues than is visible on the surface imho.