Member Info for Jinny122

Fact is that Metro's reason for existing now as a loss making and balance sheet challenged tiny standalone bank is threadbare.

IMO, Covid should bring rapid change here. Otherwise, Ccnt see what Metro will be doing for the next 1 to 2 years otherwise as covid impacts play out.

Theosus

Metro is a perfect fit for this.

It aspires to be a community bank for small business and has the 'people-people' service model.

Its branches are branch personnel currently likely to be very under utilised. The other banks / lenders have profitable business models they need to protect first. Metro doesnt, so it can afford to focus on the CBILloans front and centre.

RBS doesnt have personnel capacity to do most of the CBIL loans as well as manage its huge corporate customer base (largest in UK), huge retail branch network, huge resi customer base, Investment bank etc.

Nationalisation will be at an agreed price with the board of directors under this scenario.

Fact is that Metro is by a significant margin the cheapest bank with a branch network in the UK. Simples.

Metro also doesnt have balance sheet capacity to make much in way of new loans under the CBIL.

Win-Win solution.

Easy solution for the CBIL programme.

And rapidly replaced it seems...... https://www.metrobankonline.co.uk/about-us/metro-bank-team/

Metro is 100% deposit funded, so without growth in deposits (as they now pay lower rates of deposit interest than many others), there'll be next to no loan book growth. MREL omly helps to reduce required capital backing for new loans, its not a source for making new loans, they need £billions to make a mark on existing loan book

Zzcax, not true. Their loan book shrank in 2019 and is expected (by Ceo) to shrink again in 2020, and that was before covid impacts and base rate cuts.

No point counting retail customer numbers, loan book is what pays the bills

If all assets are sold and all leases paid off upfront, shareholder value will still be much higher than today.

The alternative is to carry on as they're doing, making huge losses (as a % of revenues), losing customers to more competitive/hungrier rivals while the 9.5% MREL acts as a vampire.

No choice really

NOVE - think the branches are not a big problem. Expand safe deposit box capacity (theres huge demand in many locations) and run down the leases. Or re-assign leases peicemeal to third parties in many locations

Huge asset sales to incumbent players is now more likely here.

Not sure how they can ever turn a profit in next few years with covid, fierce competition, rock bottom base rate and 9.5% MREL weighing on their back.

New interim chief risk officer seems to have been appointed. Also a new interim chief transformation officer. Question is why interim? why not permanent?

Metro SP collapsed from £40/ share to £2/share during a global economic boom. And now you think it will shoot up in the face of emergency measures to avoid a recession

Jimdson, it is factual observation. Metro is constrained by the size of its deposit book. It cant grow its loan book before or after corona virus, no change.

No point guaranteeing new loans in Metro's case as it doesnt have the deposit book to grant new loans. Its already at 100% loan-to-deposit ratio

Theosus, at what point does everyone see and conclude that there is something deeply wrong with this company.

How many more issues, failings, investigations, losses, mismanagement, bad news can people make excuses for?

It was a noble experiment which has utterly failed IMO. Banking requires great skill and the big players are the ones with that skill.

And another punch lands: https://www.theguardian.com/business/2020/mar/17/metro-bank-hit-with-fresh-lawsuit-by-iranian-customers

Investor6, one cant compare Metro with Barclays, Lloyds or RBS. These are huge banks diversified by funding sources, activity, geography (excl. Lloy) and income streams. Metro is a simple one trick pony.

Government underwriting of loans helps only to minimise hit from bad loans, but they dont assist with cashflow required to meet day to day overheads.

These overheads are very manageable for Barclays, Lloy, RBS but they are crippling for Metro.

There is an urgent need for action by Metro leadership.

Consider this:

Metro's outgoings: Paying interest to depositors, paying 9.5% MREL, paying lease costs, paying staff costs.

Metro's incomings: Predominantly Loan book interest and a comparatively small amount of Activity based fee income

In light of the need to grant payment and interest holidays to help personal customers and small businesses, Metro has three likely choices:

Choice 1: Run a huge loss for 2020, depleting cash reserves and shareholders capital.

Choice 2: Sell a huge chunk of loan book to larger rivals strong enough to support those borrowers through the difficulties.

Choice 3: Sell the bank to a larger rival who can best support its customers and enable its development.

A choice must be made this month imo, before full government Coronavirus responses kick in and severly restricts the economy.

Theosus, agreed.

The question becomes what are new appointments joining to accomplish? Seems a lost cause

CEo packages gives almost zero incentive to agree a takeover.

Looks more likely they'll be forced by regulators.