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Times Commentary: Metro Bank’s board needs to do its job and find a decent leader
Private Equity Circling (key sentence)
Korn Ferry’s task in trying to rustle up a list of viable candidates is undeniably difficult. The bank’s accounting issues are still being investigated by regulators and the bank must deliver a new strategy alongside its annual results next month. Meanwhile, private equity firms are circling.
you have mis-interpreted that part of the update. Folowing the disposal the "loan to value" was reduced by 1% point.
Indeed, Mr Donaldson was arguably a more pragmatic believer in the strategy than his inspirational book-signing chairman. It’s just that — after those capital scares and a 90 per cent share price fall — the City can no longer believe in him. However, if his departure is more about credibility than strategy, then interim boss Dan Frumkin might not feel a need for major change in February’s transformation plan. He could choose slower branch and loan growth, with more cost control, over a £1.7bn loan book sell-off. That might prove better news for shareholders — if not entrepreneurs seeking more finance.
Craig Donaldson’s imminent departure as chief executive of Metro Bank, just nine weeks after the exit of founder-chairman Vernon Hill, might be explained by an anecdote from a fintech entrepreneur. For several years, the entrepreneur sought to borrow from the challenger bank. But, each year, he was shown into Mr Hill’s office only to leave minutes later empty-handed — except for another signed copy of the chairman’s inspirational book. Then, one year, to his surprise, Mr Hill agreed to a deal, flung open his office door and bellowed: “Craaaaaaig! Get in here! Now!”
This view of Mr Donaldson as a mere implementer of his ex-chairman’s strategy would certainly suggest one reason why he is now surplus to requirements. However, evidence beyond the anecdotal indicates that Mr Donaldson has been more active defender than passive facilitator of Metro’s strategy — and is leaving for unconnected reasons.
Metro aimed to challenge in the mortgage and corporate lending markets — and it was Mr Donaldson who led the fight for a level playing field here. He pushed for Metro to be allowed the same lower capital requirements as the big banks from this year onwards. But he was made to wait until 2021. In the meantime, ringfencing regulations have forced big banks to deploy their UK deposits in the mortgage market, starting a price war that hit the margins of smaller scale, branch based rivals like Metro.
Metro aimed to be well capitalised but its financial position was thrown into doubt by a misreporting of risky loans — and it was Mr Donaldson who worked to stabilise a situation that Mr Hill seemed keen to gloss over. Amid a regulatory probe, he led a rescue fundraising — and his departure now, but retention as a consultant for 12 months, suggests the regulator will report imminently but exonerate him. Mr Donaldson also managed the resolution of a failed bond issuance, after unwilling investors cited Mr Hill’s governance style as an obstacle.
Metro tried to differentiate itself as a branch-based bank, too — and Mr Donaldson understood this meant offering more than Mr Hill’s gimmicky dog bowls. His delivery of high service levels has built a customer base of 2m — as big as digital rival Monzo, and rather proving FT Alphaville’s contention that Metro can be “Monzo for old people”.
FYI: Trading / Production Update due Thursday 14th Novemver 2019.
Given you have stated that you do not hold a position in MTRO it's very surprising how much energy you expend inposting about this particular asset - don't take offence as this is just an acuurate & factual observation :-)