RE: Twitter FT summary25 Sep 2019 08:31
And Part 2
They pointed to the precedent set by the Co-operative Bank, which was given extra time to raise MREL when it was going through a major restructuring.
The Bank of England declined to comment. Customers pulled £2bn of deposits out of Metro Bank in the wake of its scandal, but last week’s bond prospectus showed it recovered much of that over the summer.
However, Jérôme Legras, head of research at Axiom Alternative Investments, which attended last week’s investor roadshow, said it would take more than a single quarter of improved performance to win over sceptical investors.
“I would say the biggest uncertainty right now is the [Financial Conduct Authority’s] investigation?.?.?.?that is clearly something that will need to be clarified before they can be a normal capital markets issuer.”
The FCA and the Bank of England launched investigations into Metro after it announced the error in its risk-weighted assets, and last week’s prospectus said the FCA had expanded the scope of its probe and warned the affair could have significant costs for the bank.
The crisis has led to speculation that Metro, the highest-profile of the wave of post-financial crisis “challenger banks”, could end up being bought by one of its more established rivals.
John Cronin, analyst at Goodbody, said: “We wouldn’t be surprised to see Metro cornered into a sale in the relative near-term,’’ especially if it suffered a further decline in deposits.
Metro said: “Metro Bank has a strong capital position and therefore the flexibility to raise new capital at the right time between now and the end of the calendar year.”
Hedge fund manager Crispin Odey, founder of Odey Asset Management, has emerged as a big winner from Metro’s share price slump. He said he has been betting against the bank for about a year and a half, and he now holds the biggest bet against the lender — a 3.38 per cent position.
“They don’t have a business,” he told the Financial Times. “They’re not helped by zero interest rates and the forcing of UK banks to have their own capital. “They have to raise this money, they need this,” he said of the bond sale that was pulled. He added that trying to build a business by opening branches was “an old-fashioned business model”. Marshall Wace and ENA Investment Capital also hold short positions against Metro.
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