Member Info for Jinny122

https://news.sky.com/story/early-spotify-backer-tcv-in-talks-to-back-7bn-fintech-revolut-11892117

https://www.cityam.com/takeover-interest-mounts-over-sainsburys-1-9bn-mortgage-book/

https://news.sky.com/story/lloyds-beats-rivals-to-3-7bn-tesco-bank-mortgage-book-11773503

https://www.standard.co.uk/business/market-report-is-lloyds-pondering-a-bid-for-metro-bank-a4276271.html

There certainly seems to be a buoyant appetite for banking assets at the moment. MTRO should be the jewel here, great scope to ramp up online presence while additinally offering high street presence. It can clean up among the challengers

We are all aligned I believe. FCA and PRA work jointly to promote good conduct and financial stability. Unnecessarily destabilising a UK high street bank will not be desired

Good points.

But Bacal went from 0% to 6.13% in rapid fashion. Any additional 1.5m shares will amount to £3m purchase price, vs. £20m already invested. So its not likely to cause a sweat.

FCA acceleration is critical because the absence of which is weakening the bank, as recently demonstrated by the hugely expensive 9.5% coupon on its bond. This is a bank with no permanent chairman or Ceo, no one will accept until its future becomes clearer. Also remember that MTRO has seen depositors panic in recent past over fears about its stability. Given these factors, there should be every incentive to expedite the matter.

What are they all up to??

Cudders - surely thats not the answer. Piecemeal sales of the lending books and deposits will generate more value for shareholders. Mortgage book alone should fetch £10bn, but of course there are liabilities to settle

QUESTION: What arguments do management have to agree a sale of MTRO at less than the full Book value of £10/share?

One could be that with a hefty FCA fine, they had no choice but to sell in order to stabilise the bank and protect depositors' money.

Another, the business may be being squeezed badly by fierce competition that if they hold out longer, margins will be decimated and there will be no likihood of future profits for a long time.

Third, future MREL and other capital requirements may mean the bank has no viable stand alone future and it is in shareholders interest to sell up now and allow the bank to benefit from acquirer's financial strength.

Or perhaps it is the opening pitch in a negotiating tactic with landlords to support rent reductions via a CVA on the store portfolio. Argument being that the bank is loss making and needs more breathing space. Landlords will be hard pressed to find alternative tenants with similar high profile.

Interesting that Friday's FT article on MTRO strangely had a wide array of top-end PE funs all conveniently of the same view (re: MTRO branches being an issue for them) and willing to speak to the press about it all at the same time. ALSO on the same article, we conveniently had a 'Source' from the regulators saying that PE ownership of MTRO would be better than the alternative (i.e. risking savers' deposits) if MTRO gets in trouble again. FINALLY, we did not have a single input from a traditional lender in the article..... CONCLUSION: IMO the ground may be being prepared for a PE TO of MTRO which may involve the mass shut down of branches and taking it online. The branch closures may be controversial, but it will be argued it is better than the alternative.

Thats $1BILLION in debt while heavily loss making

Not So. As already pointed out, Revolut are raising $1BILLION while making a £33m loss on £58m revenue

MTRO was worth far more as a much smaller and more heavily loss making bank than it is now. THINK why that is for a second. The priority for MTRO at this stage of its evolution is not profit, but revenue growth. Profit can come later once it reaches critical mass. THINK why is Revolut worth £5.5bn when it makes a £33m loss on the £58m revenues it makes??... MTROs issue is that its capital constraints are severly damaging its growth potential, hence the rock bottom SP.

MTRO has a cult following by customers who want an alternative from the established big lenders. Its not a coincidence that they call them 'FANS'. Not all walk in visitors become customers, thats correct, but those that do establish an ongoing relationship with the bank. MTROs primary route to growth is opening new branches, THINK about that for a minute. Why would someone in Edinburg for example choose to bank with MTRO without a branch in their city??

You have to look at bank branches very differently from retail branches. MTROs branches for instance attracts walk-in customers through their high visibility on the high street. These customers are typically long term (bank accounts, savings, personal lians, mortgages etc.) and generate a continuing stream of income for the bank over the years which help it cover future costs of branch network. So even with zero new customers visiting branch, there is an existing base of recurrent income servicing the cost of the branch network. New customer wins are an additional bonus over and above. Branches are the MOST CRITICAL aspect of MTROs business, especially during its current growth phase. Now compare that to a cloth store for example, it must keep selling new clothes every day to cover its costs. Zero cloth sales means likely bankruptcy.

https://news.sky.com/story/early-spotify-backer-tcv-in-talks-to-back-7bn-fintech-revolut-11892117

And Yet MTRO, £450m revenue, modest loss, value: c£0.3bn.

Acceptance by voting shareholders in the absence of immediate alternatives and not wanting to risk admin. It is still at risk of a rival bid, anything goes until the court sanctions the scheme in Q1 2020 but time is ticking.

However, where are the H1 results??? Should have been out last week.

Not an option in my opinion. Doesnt solve the issue of poor access to capital markets at reasonable rates. A loss making bank that has to borrow at near 10%, with an accounting error on its CV and aggressive larger rivals hungry for business will be vulnerable. How will a few more millions solve that quagmire??

The sudden change in tone seems to be because banks refused to renew their facilities and sold them instead to the hedge fund. Management didnt see this coming and didnt anticipate the hedge fund's move to capitalise. There are possibly many potential suitors to buy this up, but most obvious one in my opinion is the consortium backing Tapi. Massive synergy potential exists, they know the carpet retailing business inside out and they will take out their chief competitor in one move - imagine what the profitability will be like once they stop fighting each other. And because of this, this consortium can easily make the best argument for making bybfar the highest offer.

Still hope. 30p breakeven requires just a £90m takeover bid value at present, for a business that counts cost saving upsides of £19m per annum, with trading profits to be added on top of that. - this could realistically reach £40m pre-tax profit a year or thereabouts, and we know management were targetting double digit pre-tax profit margins as part of the CVA. 30p/share is also a psychological milestone given the equity raise was at 28p

The results should be positive reading, afterall management have been reporting strong like for like sales growth so far in H1. Couple it with cost savings measures, it should be an uptrend. Debt is what is being used to beat it down, but there is seadonality in the debt and december is the absolute peak month. After which the business generates cash to significantly reduce it again. Think about this, if not for the shareholder loan (of £26m), the business will have had just £1m net debt as at end of H1 2019. I cant see how interested parties will let this go for the equivalent of pennies without trying anything