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What are people expecting from Q1 results? Profitability looks unlikely given Q423 losses which will flow into Q124. I would expect a £30m underlying loss. But i don't think that will move the price significantly up or down. That would require some form of transaction. Hard to tell if recent positive sentiment reflects movements there or is just reflective of overall volatility given limited free float
Not easy to do when there's no liquidity in the market. You'll find the sell price is a lot lower than the spot rate.
Thanks- makes sense. Suspect the little guy doesn't usually win in this sort of highly manipulated game.
"Shorts tend to lift the price early in the morning then sell heavy into the afternoon .. "
Blimey Temple of Doom- I reckon if I had bought at the close and sold at mid-day in the week since you gave this advice I would be up 25%.... This looks to be a share that is going for long circular walk everyday.
While utilizing ChatGPT for investor relations may offer cost savings and efficiency, replacing the entire management team with an AI might not be feasible or advisable due to the complexity of leadership roles and the need for human judgment and empathy in decision-making processes.
Thanks Five. I enjoyed that. In all seriousness I hope you keep your job and are blessed with a management team able to display leadership, judgement and empathy in the not too distant future
"I asked ChatGPT to reply to ChatBot2 response. AI vs AI."
A very sensible answer Chat GPT. Replacing Metro's investor relations team with Chat GPT sounds like one of the more sensible cost reduction options taken. Can we do the same with the management team?
No. Running an unhedged balance sheet which has resulted in the bank foregoing >£200m of income which would have avoided the need for a capital raise and saved most of us on this chat significant money is what is absurd.
I have to assume from your limited understanding of the issues that you must be what is left of Metro's investor relations team!
If the UK had a deep pool of government guaranteed 10 year mortgages you can bet your life Frumkin would have put everything he had into them for an extra 20bp. So now we are just arguing how stupid Frumkin was, but we can atleast agree he was pretty f*ing stupid
Slight corection, They put most of the £3b of mortgage sale into Gilts, adding to a book of atelast £2b. SO they have £5b of treasury assets yielding 0.5%. It is in the annual reports- you can see what it does in the fair value adjustments. So yes, Dan Frumkin was just as stupid as SVB
"SVB bought securities with long-dated maturities in what was a low return environment. Dan Frumkin did not succumb to the same stupidity so I don’t understand"
Metro put atleast £4b of the proceeds of the mortgage sale in long dated government gilts- average of c5 years from what i can see. You can see it in the latest results. you clearly just dont understand the basics here
"Chatbox1 can you try and translate that into plain simple English there is alot of smoke and mirrors in those posts and it's difficult I guess fir most readers to figure out what you are trying to say!"
Difficult when you deal with experts for a living but i will try. Metro should have made a load of money from rising interest rates because it had a load of low cost deposits. The challenge is because its assets were unhedged you have to wait until they mature (i.e. if you took out a 2 year Fixed term mortgage i have to wait 2 years and then reprice it). That should still have been ok albeit we missed out on the bonanza that saw other banks reach peak profitability this year. We shoudl have seen strong profits in 2025. But rising rates also push up the cost of deposits. That was entirely manageable with the business Metro was running, but Frumkin somehow managed to engineer a run on the bank which meant 25% of his low cost deposits walked out the door. That has cost the best part of £70-£100m quid and pushed the bank back into losses. The cost programme is a short term option to stem the bleeding but unfortunately what they have targeted are the higher yielding consumer finance business which would be making good money today, and the branch business which underpins the low cost deposits. So as I said, their low cost deposits are disappearing replaced by very expensive retail and wholesale funding. The bank needs higher yield lending to make that work. But at the moment it has £3b of mortgages that are underwater and clearly uneconomic to sell and £5b of treasury assets a bunch of which is where Frumkin put the funding from selling the last chunk of mortgages to Natwest in, so are locked in at 0.5% until 2025. Criminal stupidity that has long reaching consequences not unlike SVB. I want what you want, which is a Metro bank that works. But it can't be done as a stand alone entity anymore. And we retail investors are highly vulnerable because Galinski will dilute us given half a chance, either when he has to put the money in to unlock teh organic strategy or if he becomes the buyer. So we need the bank to fire Frumkin and sell ASAP
Firstly, the hypothesis that you should stick together a specialist lender with a subscale current account provider is one i entirely agree with. It helps solve the quality of earnings issue with the former and the scale issues of the latter. So you get a tick for that
The issue is that Metro does not have the organic capital generating capability to do this sort of balance sheet transformation on its own in the near term.. As i have outlined below, it takes 3 years before management think they will make meaningful profits and there is plenty of downside in the interim. I wont set out in detail the maths behind why you can't just cycle existing mortgages and treasury assets into high risk lending in 2024.25, but its to do with the fact that the book is unhedged. So you need fresh capital to achieve this ambition (and again, a competent management team)
I think holding on expecting this management team to pull off the unlikely outcome above is a bad option. Which leaves 2 others
Firstly Galinski could do the buying . The issue for us is he will want to back the combination into the Metro entity to avoid fair value issues. That means it will involve cash and paper. And guess who will get diluted on that one. Yes, the same mugs (like me) that got diluted last time.
Alternative is to sell (to Shawbrook). I am all for that. But we need Frumkin out the picture, because he is seen as a complete fool by anyone that has had dealings with him including I strongly suspect both Pollen Street and Shawbrook management
"So we can expect Chatbot2 to come on line shortly to try and talk the share price down..."
Go on then, It's a quiet day and i'll have my 2p's worth (or £2.50p as Non-partisan will wittily point out).
I should start by saying I am not a day trader. I don't trade momentum and unlike TOD (thanks for genuinely useful intel BTW) I don't understand the dark arts of shorting. If you do, then i am sure there is money to be made from the volatility that there will be as this bounces between 27p and 34p for the next few months.
But you and others like Sharebul are moving into my territory when you talk about fundamentals and, in the probably naive view that there remains a vanishing small number of people on share chat who want to understand them. I'll set out the issue with your hypothesis regarding a re-rate
I didn't want to say it, but from what i can see TGTD:
a) Does not understand the impact of interest rates on a bank
b) Does not understand the difference between current accounts and other deposits
c) One minute says something is worth 70p then its 40p
is it me, or is there a strong possibility that TGTD is actually Dan Frumkin?
So who knows anything about Pictet Asset Management?
According to the website:
"Our structure as part of a privately-held partnership, rooted in Swiss tradition, gives our independent asset management business the freedom to concentrate on the long-term view, without the pressure of external shareholders. This allows us to give you our undivided attention, offer pioneering strategies and deliver successful investment performance."
So why is a secretive Swiss Asset Manager shorting us? Dori. any thoughts?
"So why were you not here crying out that Frumkin was lying at the last trading update guiding the market that Metro Bank had returned to profit and was now firmly reaping the fruit of its recovery?"
In terms of lying. i do believe there may be a case for litigation. In the prospectus the bank guided to low single digit ROTE in 2024, despite knowing the catastrophic impact of losing those deposits. So maybe rather than hoping they can turn it round the value play might be to sue them.
"So why didn't you take your own advice and not invest in Metro Bank last year if you thought it was a shoddy poorly led business?"
Because i genuinely thought that in a rising rate environment it was impossible to mess it up. From Dec 19- Dec 22 the bank had grown current account balances from £4.3b to £7.9b. Not i should say, because of anything Frumkin did. But people opened current accounts, and during Covid, kept a load of deposits on them. All they had to do is keep their fair share of them by not messing up. But they did. They lost all that value because the CEO was a clueless baffoon. And now he thinks by sacking everyone and destroying the model that generated those deposits, he can save his skin. But it just doesn't work. You cant shrink your way to glory with a sub scale current account business.
"Chatbot2; Do not see WHY gilinksi has kept Frumkim on in his role ? With what has happened to Metro under his watch"
Combination of what Westang said and i said. i,e, Frumkin put Galinski ahead of alternative bidders throughout the last year because Galinski was the only person who might keep him in role. In return Galinski got to buy in at what seemed a knockdown price- not so sweet now though
The issue now is that it isn't easy to replace him. Galinski not (yet) on the board. Chairman in particular hugely compromised. Firing DF might put the bank back in the regulatory spotlight and expose possible misconduct all round
But not firing him gets in the way of a deal. Maybe they need to do the old Lenin trick and just bring Frumkin out for special occassions- but after last weeks performance they best tell him not to open his mouth. But Galinski then needs to pull his finger out and do the negotiations. At 40p he's not too embarrassed and we might end up with a half decent bank.
"Presume gilinksi knows what hes doing. Frumkim was his patsy, to get capital raise done. Wasnt frumkin mates with founder? Was founders patsy?"
I think the link was old CEO (both at NatWest when that bank's shareprice collapsed from £40 to £2.50); So between them they have outdone Fred the Shred!