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According to Which?, 5,600 branches have closed since January 2015, which equates to an average of 54 each month.

But Metro’s plans to spearhead a major shake-up ran into several other problems.

The first is that it is incredibly hard to get people to switch bank accounts. The challenger banks thought it would be much easier. They assumed that there were millions of people out there so fed up with the woeful service of the current provider that they’d leap into the arms of a fresh-faced upstart.

It’s actually not that hard to switch but most people think it is and therefore don’t want to go through what they perceive to be the hassle of changing banks, or they are too lazy and complacent to even consider it in the first place.

Despite a flood of new entrants, supported by new regulation such as open banking, that is something that has proven remarkably hard to change. In some cases, switching numbers have been going backwards. Even one-off cash payments, food delivery vouchers and other gimmicky incentives have failed to encourage customers into action.

There have been no end of banks claiming they are about to upset the established order but it is hard to think of a single name that has made anything other than very marginal inroads – whether it’s the hedge fund-owned Co-op bank with its questionable ethical credentials, TSB or Virgin Money.

These are merely sub-scale lenders as opposed to real challengers and they are destined to remain so without something to team up with, hence the endless merger speculation surrounding this corner of the market. In comparison to HSBC, Barclays or another of the big beasts, they are all piddly, and as a consequence have struggled.

Some may quibble with the idea that the smaller high street banks are even challengers, but size is vital in order to compete as Metro has aimed to do. It’s why scores of start-up energy suppliers went bust in quick succession leaving the energy market once again in the hands of just a few big names.

A new generation of fintechs such as Revolut and Monzo haven’t fared any better for precisely the same reason – a fancy app and some brightly coloured debit cards can’t defeat old-fashioned economics.

Without the deposit base to compete in mortgages and current accounts, Metro has been forced to move further into riskier forms of unsecured lending. It’s a weakness that has been exacerbated by the regulator’s unwillingness to lower the bank’s capital requirements.

This “curtails the bank’s ability to grow its business and strengthen its profitability”, ratings agency Fitch said after placing Metro Bank on “negative” watch for a possible credit downgrade. Meanwhile, Shore Capital analyst Gary Greenwood said anyone supporting its fund-raising efforts would be “throwing good money after bad”.

The upshot is that the same big four or five names remain as powerful as ever – proof if any was need

Comment

Metro Bank’s mess shows the stranglehold of big lenders can never be broken

The flag-waver-in-chief of the challenger banks may be facing its denouement

Ben Marlow

Associate Editor

5 October 2023

4:25pm

If there’s ever a national competition to decide which company has contrived to produce the most terrible corporate motto, there will surely be a place for Metro Bank.

There’s the confusing “we are people-people”, which sounds like someone with a personality disorder or a stutter.

There’s “welcome to our world”, a strange rallying cry given how boring banking is even when you employ clowns on stilts to mark your branch openings.

But nothing as unfortunate as the promise that “you’re in good hands” after its shares went into freefall on Thursday morning.

Depositors will almost certainly be safe, so at least there’s that.

Concerns about the bank’s future stretch back four years, and as the fallout from the collapse of Credit Suisse and several American regional banks reverberated through the banking sector earlier this year, regulators ordered the bank to draw up plans for an orderly wind-down.

But the same certainly can’t be said of shareholders after Metro Bank’s share price crashed 25pc in early trading on reports that it was in talks about a £600m emergency fundraising.

It’s hard to avoid the conclusion that Metro Bank is in the final death throes, and therefore so too the whole wildly over-egged challenger bank experiment.

Metro Bank has certainly been challenging – but not in the way it intended. It has challenged the mental and financial wellbeing of those naive enough to swallow the idea that it was about to upend the banking establishment when it leapt onto the public markets in 2016.

It had already been around for six years at that point, yet investors still bought it at an eye-watering £20 a share.

With the share price currently standing at just 38p, shareholders have learnt the hard way that it will take much more than a handful of brightly coloured branches and the offer of free dog biscuits to present any sort of threat to the long-standing incumbents.

With hindsight it’s a miracle that anyone, other than Metro’s fanatical founder, Vernon Hill, thought that its branch-heavy model was a good idea in today’s smartphone-dominated world.

There’s a reason why for many years now, the big banks have been closing branches left, right and centre, and that’s because fewer people are visiting them – and when they still do, it is with increasingly less frequency.

Meanwhile, almost three-quarters of adults now use online banking, meaning the banking industry can argue that it is doing nothing more than responding to the needs of customers.

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That’s a bit unfair, @Daytradenovice - his comments imply that he’s had little or no interaction with the education system.

The ensuing lack of social interaction with his peers would also explain his desperation to talk and talk and talk, and then to talk some more… all the while saying nothing.

@daytradenovice. There’s one on almost every popular discussion board. They’re attracted like moths to a flame - it’s the only place people will talk to them, and they can pretend to have hundreds of thousands invested, to be married and to be on holiday in the tropics somewhere.

I don’t think it’s right that it’s gone on and on and I do think that some of the things said to you, Dark Knight, have been out of order & naturally provoke a reaction from you. Which is why I’ve said both sides have the right to stand up for themselves.

You’re now calling them various things in return which is likely to provoke a further reaction so this exchange will go on and on. I understand why you have reacted and why they will too.

I should add that I understand why individuals are irritated, and you have the right to reply and stand up for yourself. It’s just that we have mutual foes e.g. falling share prices and people like the south coast skinny dipper (grab a magnifying glass to determine its sex. Oops, I’ve focussed the sun on it and it’s smoking. There’s less of it left now and there was so little to start with. Oh well, never mind).

It’d be good to concentrate on our mutual foes rather than on each other. But I know what it’s like when things kick off so I appreciate the feelings on both sides.

As an outsider, can we call a ceasefire please? It’s just been so lovely on here since a certain south coast bather was pulled out to sea by a TGA riptide so we haven’t had to endure his daily drivel, squirted out as often as diarrhoea from a dck with dysentery. The post count has fallen and the share price has risen - it’s like it used to be.

Maybe call a ceasefire and only react if the other side throws in a hand grenade. Hopefully neither will.

What a change from 3.4% down to 7.6% up today

;0 )

Edward, I think the answer’s yes. I’ve booked a vaccination.

LSE seems to be SCB’s social life and raison d’être. I suspect that we are the only people who talk to him - it would explain why he can’t stop.

OK, we get the message - TGA is doomed and the SP will fall. And you know because you’ve conducted an extensive financial analysis (a 2-second glance at the graph). Sorted.

There’s no need to tell us again.

Everyone else, shall we run a sweepstake on how many minutes it will be until he repeats himself? I could draw up a bingo card with his key words & phrases.

@SCB: “Glencore? How did they do in 2015?”

Your response to Glencore calling bottom in coal is to say “Yeah but… they did badly once”. It’s like talking to a child. “1” strikes again.

The answer to your question: Glencore did terribly in 2015, which enabled some of us on here to buy in very low and make a killing thereafter. Thanks for the reminder.

You are terribly good at scoring own goals. I’d want you on the opposing team, every time.

SCB,

1. Your objective is “the share price will fall” and you seek anything to justify that.

2. When you came on here, you weren’t even aware any dividends had been paid or their size! You clearly had no idea either about TGA or the stock market in general. Once you were told about the dividends, did it affect your opinion? Of course not - see “1”.

3. You plagiarised a Motley Fool article, passing it off as your own (though it was obvious that it wasn’t). It was dishonest of you.

4. As a side issue, yesterday you tried to pass off your sub-Year 1 primary school English as a typo. Again, it was dishonest of you.

5. You are not discussing things - you repeat yourself, and see “1”.

6. If you were negative about TGA for good reason, fine - state your reasons. You don’t - you are just negative. You come across as seeking attention.

7. I could educate you about TGA and the stock market but I’m not going to waste my time. Why? See 1-6 above.

8. I could say more but I can’t be bothered.

Yesterday I spotted that an entire thread had been deleted. I commented on that in this thread at 1523 yesterday.

SCB replied 4 minutes later (!) saying he didn’t know why but then proposed why, almost as if he knew. He alleged a comment had made fun of mental illness.

What’s odd is that very comment by SCB in this thread has now been removed. I didn’t notice anything offensive in it. I am now wondering if it might be that what SCB alleged isn’t actually true (?). (I can’t tell of course as his allegation was about a comment that has been deleted).

Then debate and discuss. Instead you just say the same thing over and over again which is neither debating nor discussing.

You add nothing new - you just repeat yourself. Your daily number of comments is off the scale.

@SBC. That’s sad - making an excuse which is patently false. It’s clearly not a typo as you have made the same mistake elsewhere.

On top of that, your English in general is awful. Absolutely terrible.

As for the rest of your comment, you have done precisely what @FreddyHayek said i.e. repeated yourself. You do that because you can’t think of anything intelligent to say, because you have no idea about financial matters. That’s not surprising as financial analysis is a high level skill - you can’t even achieve the lowest of low level skills i.e. the lofty standards of Year 1 in a primary school.

How embarrassing.

“That also burned coal on the titanic....”

It’s a capital T. And starting your sentence with “that” is poor English.

It’s wise not to take financial advice from people who think they understand the complexities of the stock market yet can’t understand basic English. Capitalising proper nouns is taught to children at primary school. I’ve just Googled when - Year 1. You don’t know something taught to children in Year 1!

But back to your red herring about the Titanic. Over the last year, the National Grid generated 39% of its electricity from fossil fuels. And that’s just this country. The relevance: Titanic - old. The last year - not old.

SCB, you don’t know for sure but you remember something very specific?!

If someone genuinely made fun of mental illness, I agree, that would not be on. But did someone really, truly do that? Honestly? This has been a LOVELY board so I would be surprised. Then you turned up and, wow, did everything change. You jumped in, both feet first, flaming people.

We’ve even had people from the BOO board come over here, saying you’re doing here what you did there. That suggests you get a kick out of what you’re doing, and that your comments are not about the share, they’re about attention and provoking a response.

@FreddieHayek hit the nail on the head - you are repetitive. For example; the other day you posted the same, long comment three times in something like a little over 12 hours.

A different thread on here just got wiped! Shortly after SBC posted.

@EdwardSeaton,

I agree that what SBC wants is attention. He is like a virgin on a one week holiday with you, fresh out of college, teasing you because you only got laid twice.

Have you noticed how he keeps getting one vote up? I suspect he has a second account.

I tried to follow your previous advice on how to filter people but couldn’t see how to despite your instructions. I don’t know if it’s because I’m on an iPhone. Can you tell me how to do it? There’s no “filter” option that I can see.

Thanks.

@bankrak:

You can explain it to him but you can’t understand it for him.