UK Metro Bank rejects ‘false rumours’

The shares of Metro Bank, one of the so-called challenger lenders in the UK, have touched another record low despite its assurances that its £350m (€400m) shares sale to repair its finances was well advanced.

Metro has started “final discussions with existing shareholders and new investors, and the feedback continues to be positive”, said the firm.

The bank said the sale will be completed by the end of the second quarter, sticking to a schedule announced in February. 

Shares in the bank have lost three-quarters of their value since regulators found that some of Metro’s mortgages were given the wrong risk weighting. 

Metro Bank branches are open seven days a week.

Over the weekend, its Twitter account fielded multiple questions from people who said they were customers.

Some said that there was a queue in their local branch. The bank said that there were “increased queries” about access to safe deposit boxes.

The decline deepened this month, when the firm said some business customers had pulled their deposits in the first quarter.

Over the weekend, Metro moved to reassure customers after a photo of queues at a branch in Harrow, London, was posted on social media.

There is “significant urgency” for Metro to get the share sale done, wrote Robert Sage, an analyst at Macquarie Capital.

“Capital is, in our view, at minimum levels,” he said. “Our view of the stickiness of the deposit franchise, and by implication the loyalty of the customer base, is less good than we had previously thought,” he said.

Metro shares fell 8%. The company’s bonds also fell.

“We’ve seen reports of some false rumours about Metro Bank on social media and messaging apps,” said Anthony Silverman, a spokesman for the firm.

“There is no truth to these rumours and we want to reassure our customers that there is no reason to be concerned.”

Metro was among the challenger banks that appeared in the UK after the financial crisis, taking on the UK’s four big established lenders. 

Led by US entrepreneur Vernon Hill, the bank has been dotting south-east England with branches while the legacy lenders close them, aiming to attract retail customers and their deposits with better service and longer hours.

UK customer deposits are guaranteed up to £85,000 if a bank gets into financial difficulties, while post-crisis rules mean lenders are now structured to ensure deposits can be moved to another bank more easily to ensure continuity of service.

Bank of England declined to comment.

Bloomberg and Reuters

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