Member Info for Jinny122

The good thing here is that this is a bank dealing in and whose assets are the commodity of money whose value is not subjective in the absence of distress. £1 is worth £1 as someone said on another board. As much as we'll all like to buy a £10 note for £3, I doubt there'll be many takers

EXACTLY with regards to the dilution point. Post-dilution that £30/share is around £16/share, and you can now see why £10/share book value is a point from which a deal may be doable. Certainly not from £2/share

Bigsmoke... will leave you to negotiate a £5 T/O with the day 1 institutional / fund investors in MTRO who were buying at £30 per share as recently as 2018. Good luck!

Bigsmoke.... Reason is that any bid at these low levels will be immediately rejected by the shareholders. A much higher SP is advantageous to a large bidder as a deal can then be done and everyone save face

The closer to book value someone like Lloy can get, the more palatable it'll be and the more liklihood of a deal. But that value gap to SP is too huge to not look like grossly overpaying

IT SEEMS CLEAR NOW.

What seems to be going on here is that the big banks prefer MTRO share price to rise sharply so they can make a bid that is in line with book value and avoid the embarassment of paying a huge 500% premium.

Whereas, a team of shorters seem keen on preserving that embarassment factor for the big banks by keeping the SP firmly low and maintaining the huge price gap to book value. Looks like a defensive anti T/O measure to me. Question is - who are the shorters working for???

JTMacs.... In the absence of a T/O by a larger richer rival, what exactly will drive the upward revision in the SP that you are so expecting???

MTRO couldnt even grow its loan book in Q3 as it didnt have enough deposits and capital
It is outrageously uncompetitive in the resi mortgage market. It cant borrow from wholesale markets at palatable rates. Its founder and visionary has left. No permanent CEO or Chairman. Its abandoning its strategy as its no longer profitable, but there is no obvious standalone alternative in sight. SP has crashed 90% but still no institutional interest.

What is your belief based on???

Jimjam.... credible too. There is a long list of potential suitors, but VH holds the key. He'll have links with many of wall street ceos, he'll be the guy who markets MTRO to potential acquirers. There is NO BETTER salesperson for MTRO than VH.

It wont be a surprise if the results are released early and without prior warning in late Jan 2020 in the event that a TO is agreed. There'll be no need to wait till Feb

Tricky752....... interesting point on the fintech / challenger combination. Coincidentally both Revolut and Monzo are fundraising for growth at the moment

UK banks wont appreciate MTROs model as much as a new US entrant for example. VH had little positive to say about the established UK retail banks and wants to get as far away from their practices as possible. The notion that MTRO is then sold to a UK bank runs counter to this

Some convenient coincidences: VH (American), VH's business network of contacts (largely American), Top MTRO investors (American), MTROs business model (American)....... Eventual acquirer (American, IMHO)

HSBC has a small enough retail footprint in the UK to allow it to buy MTRO without competition /monopoly issues. It should all be measured in relation to Lloyds' position, any of RBS, Santander, Barclays, HSBC can make the acquisition and will still be much smaller than Lloy

TSB was owned by Lloyds (dominant market player) until fairly recently...... And dont forget in MTROs case, there are elements of a rescue from the view of the regulators . So the big UK banks may be able to acquire it on the proviso its run independently. Afterall this also makes sense for the acquirer, you dont buy a MTRO to turn it into a Halifax for instance.

Jimdson... Agreed on the bigger bank point. They wont botger with JV, they'll just sawllow MTRO head-first Lol

Things that JV is unlikely to fix: 1. competitiveness in fierce UK market, especially mortgages (its core area of lending), 2. Economies os scale with regards to branch network will not be there. More synergy potential exists for a UK incumbent 3. Access to debt markets remains tough as Republic bank is not a known entity 4. Deposit book growth in UK wont be assisted by Republic bank, 5. Not sure how it fixes MREL, Republic bank is very small and only just entered New York market in 2019. It needs its own capital for its own growth

BigDano..... thats a possibility. Although very ulikely as it doesnt address any of MTROs current challenges. And with UK bank ring-fencing, there will be limited ability to extract cash from UK operations. MTRO requires a UK focused solution

With VH totally out of the business and with no influence at board level nor on the bank's future direction, you have to wonder if he and his associates are now ready to sell up. MTRO's board could tomorrow decide to become a completely different type of bank and he cant do anything about it. Will his US associates want to invest more money without VH's oversight of the bank given the arrival of a completely new leadership team they dont know? I doubt it.

Its a struggle at this point to see a more likely outcome besides a sale IMHO.

Anyone have any thoughts to add?

BUT growth (through building new branches) takes more 1 year+ per branch and MTRO desperately needs new deposits NOW to grow its lending book, I cant see how a rights issue fixes this. £Billions are needed to materially grow its lending book, so rights issue wont be sufficient. Then when considering the CEOs apparent open welcome of takeover bids during the Q3 results, its clear again that all roads seem to lead to a sale of the bank. Squabble will focus on the price of such sale IMHO.

From his historic comments It seems that VH and his associates are highly unlikely to agree to a sale of MTRO for anything less than a material premium to book value of £10. I doubt any acquirer will stomach such demands, so the bank wont be sold IMHO.

The fall back option could well be a hugely dilutive rights issue to fund growth and maybe refinance MREL.