Metro Bank has been forced to reassure customers their money is safe, acting quickly to quash what it described as false rumours on social media about its financial health. It said plans to raise £350m from investors to shore up its finances were “well advanced”.
The bank, which has had a tumultuous few months after an accounting blunder and slump in profits, said there had been an increase in customers coming into its west London branches who were concerned about its solvency after a WhatsApp message advised people to pull money out of their accounts and empty safe deposit boxes.
Metro Bank said: “We’re aware there were increased queries in some stores about safe deposit boxes following false rumours about Metro Bank on social media and messaging apps. There is no truth to these rumours and we want to reassure our customers that there is no reason to be concerned. We’re a profitable bank, rated No 1 for personal current account service by the CMA and committed to serving our 1.7 million customer accounts.”
The lender said the vast majority of customers had been reassured. It also noted it does not take ownership of customer items held in safe deposit boxes and the contents remain customer’s property.
Long qs in the Metro Bank today to take out their money. Seems a lot of people are spooked about having another Northern Rock on their hands. Be interesting what Metro do to counter people panicking #Metrobank pic.twitter.com/WMzL4h9L9Z
— Dylan Shah (@DylanShah) May 12, 2019
Metro Bank is battling to get back on track after it disclosed a 50% slump in first-quarter profits earlier this month, alongside the exodus of some of its biggest corporate customers. On Friday, its second-largest shareholder, Fidelity, slashed its stake in the lender by nearly a third to 5.4%.
The bank is expected to unveil details of the equity fundraising from existing and new investors this week. It issued a statement on Saturday to counter rumours it was struggling to raise cash and would have to launch a deeply discounted rights issue. This would involve tapping shareholders by selling shares to them at a special price. It said it expected the fundraising to be completed by the end of June.
The lender said: “Metro Bank confirms that its plan to raise £350m of equity capital to support its growth is well advanced. Metro Bank has commenced final discussions with existing shareholders and new investors, and the feedback continues to be positive.”
The company was founded in 2010 by US entrepreneur Vernon Hill and after a period of rapid growth, has become one of the UK’s main challenger banks. It said its gross capital position was within regulatory requirements and the cash raised from investors would be partly used to fund branch openings in Manchester and Liverpool. The bank has 67 branches in London and the south-east.
It is under investigation by the Financial Conduct Authority and the Prudential Regulation Authority after hundreds of millions of pounds of commercial property loans and loans to commercial buy-to-let operators were wrongly classified as lower risk.
Metro Bank’s chief executive, Craig Donaldson, who gave up his £800,000 annual bonus in February, recently said the bank was considering selling a chunk of the loans at the centre of the scandal, which account for more than 10% of its loan book.
Donaldson is likely to come under fire from shareholders at the bank’s annual meeting on 21 May. He offered to resign after the accounting error in January but remained in his post after the board backed him.
Metro Bank’s share price tumbled from £22 in January to £533.5p on Friday.
