Metro Bank: A tale of catastrophic mistakes7 May 2020 20:44
1. Long and expensive store leases with no break clauses
2. No product diversification, betting it all on mortgages
3. Only 75+ branches after ten years was too slow a roll-out to gain scale. And now recession has hit.
4. Accounting error on risk categorisation
5. Didnt come clean with transparency, regulators had to reveal it was them who found the error. This created a loss of confidence.
6. Undersubscribed 7.5% MREL should not have been pulled, they could have had a second round to top-up later. Or requested time extension.
7. Issuing MREL at 9.5% was catastrophic. Wiping out all cost saving progress and profitability. Now spending 8.3% of annual revenues paying MREL interest on idle capital, shocking
8. Removing VH and CD will turn out to be a huge mistake. The essence of the original excitment and investment case on Metro left with them
9. Denying CD the chance to right the ship was a mistake. A new CEO will always kitchen sink and make big changes. In this case, badly received by the market, and possibly alienating its core base of target investors
10. CEO reward structure does not reward a T/O at all, which is poor given turn of events re: covid
11. Asking Chief Risk officer to leave and appearing to brief against him wasnt good PR at all
12. Ommitting to report basics like CET 1, Provisioning and NIM in the face of worst UK recession in possibly 300 years was badly received by market
13. Not taking the chance at Q1 to hint at or launch a new strategic review in light of the unforseen developments of such magnitude was a missed opportunity
Anyone have any others to add?
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