Metro Bank sobers up and attracts a suitor
In the overhyped early years, Metro said it was going to revolutionise high street banking via the novel strategy of opening expensive branches while the fuddy-duddy old guard were closing them. The party ended in an arduous tale of an accounting blunder, run-ins with regulators and a need for more capital, factors that inevitably weighed more heavily than the bank's gimmicks such as giving free dog biscuits to the customers' canines.
But – surprise, surprise – Metro these days is not an enfeebled lender waiting to be put out of its misery. In recapitalised and less flashy form for the last couple of years, it has been making quiet progress from its lowered horizons. The branches have been kept, but costs have been taken out, most of the loan-book has been redirected towards small businesses and the number of accounts has grown. Profits appeared again at the end of last year.
If you caught the bottom for the shares in 2023's rescue deal, as Colombian billionaire Jaime Gilinski Bacal did by topping up his stake to 53%, you did well. Even before potential takeover interest from Pollen Street Capital, as reported by Sky News at the weekend, the shares had improved to 112p. It is why Metro doesn't necessarily need to throw itself into the arms of Pollen Street at any price.
The would-be bidder's reported interest is probably motivated by thoughts of a second deal to combine Metro and Shawbrook, the business-focused lender that Pollen Street owns with fellow private equity outfit BC Partners. It's true that a combination would have financial logic on its side. Metro would bring cheap funding from a sticky deposit base of current accounts; Shawbrook has a faster-growing loan book across buy-to-let mortgages, commercial property and small businesses. 'The value for Shawbrook in maintaining asset growth momentum at the same time as reducing deposit costs is potentially significant,' argue analysts at KBW.
As they also say, a deal hinges on two factors. First, whether Metro's management and shareholders – critically, Gilinski – want to head to the exit at a point when the reinvention of their bank is supposed to have several more laps to run. Second, the price Pollen Street would be prepared to offer. But the market clearly expects a deal: Metro's shares rose 18% to 133p, giving a £890m valuation.
It makes you wonder what might have been if Metro, version one, hadn't attempted an all-conquering retail strategy that took it to the brink of collapse and a near-quadrupling of the share count. Version two – sober, better capitalised and with small businesses as the target for lending – has been vastly better.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Independent
25 minutes ago
- The Independent
Flog It! star's collection of silver fetches £124,614 at auction
Silver items from the private collection of late Flog It! star Michael Baggott have sold at auction for £124,614. Baggott, who died aged 51 in January, was a recognised authority on antique silver, specialising in early spoons, boxes and provincial and continental silver. His collection is being auctioned across three sales. The first comprised a wide selection of York silver, as well as silver from Liverpool, Chester, Dundee, Newcastle, Bristol, Exeter and Aberdeen. Among the highlights was a George III York silver tontine chamberstick and snuffer by Hampston and Prince, York silversmiths of the late 18th and early 19th century. It sold for £8,190, including buyer's premium, against an estimate of £1,000-£1,5000. A Victorian provincial ceremonial spade with the maker's mark of John Bell sold for £4,032 against an estimate of £1,000-£1,5000. The spade is engraved with an armorial and inscribed: This spade was presented to the Lady Mayoress of York, Mrs W. Fox Clarke, on the occasion of her planting a tree in St. George's Field in commemorating the marriage of H.R.H the Prince of Wales with Princess Alexandra of Denmark, March 10th 1863. Baggott was known for his knowledge of silver spoons, two of which were sold together for £819. Another highlight was a George IV silver-gilt sideboard dish by Birmingham silversmith Edward Thomason, which sold for £5,040. Rupert Slingsby, silver specialist at Woolley and Wallis auctioneers, said: 'We have been so thrilled with the interest in Michael's sale from worldwide collectors and every lot in the sale was sold. 'This is only part one of his collection with two more sales to follow and this selection achieved £124,614 against an expected figure of £60,000. 'The public view was very well-attended and everyone was extremely impressed with the variety and quality of his collection.' Baggott's interest in antiques began in his early years, and he progressed to work in Christie's auction house and was head of silver at Sotheby's Billingshurst for a number of years, before becoming a private consultant. Baggott was also a published author, having written An Illustrated Guide To York Hallmarks 1776-1858 and As Found: A Lifetime In Antiques. He joined BBC daytime show Flog It! in the 2000s, and valued various silver objects.
The Independent
25 minutes ago
- The Independent
UK bank profits in focus as lenders await critical motor finance court ruling
Investors will be hoping UK banks will report solid earnings as lenders await the outcome of a critical court judgment that could unleash a major car finance compensation scheme. Lloyds Banking Group will kick off the sector's half-year earnings with its results on Thursday, followed by NatWest Group on Friday. It comes at a significant juncture for motor finance lenders, with the Supreme Court set to deliver a final judgment on alleged mis-selling by the end of the month. If the UK's Financial Conduct Authority concludes that customers have lost out from widespread failings by firms, it could set up an industry-wide redress scheme. Lloyds has said it is setting aside £1.2 billion to cover potential costs and compensation in relation to the issue, with the banking giant exposed to the market through its Black Horse business. Santander said it had put aside £295 million as a provision to cover potential payouts as well as legal costs. Gary Greenwood, an equity analyst for Shore Capital, said he was anticipating a 'common sense outcome' from the Supreme Court ruling. If firms are found to have mis-sold car loans, the ruling may allow for a proportionate redress scheme that 'punishes the worst offenders' but allows others to 'get off with a lighter touch, or maybe don't have a charge or redress at all,' Mr Greenwood said. He added: 'It'll be painful for Lloyds, but they generate about £4 billion of surplus capital every year, so it's something that they could handle. 'It's the difference between something that's annoying and a bit more annoying, rather than something that will create a systemic issue or raise severe problems for Lloyds.' Lloyds is expected to report a pre-tax profit of £3.2 billion for the first six months of the year – which would be lower than the £3.3 billion made over the same period last year. While NatWest, which is not exposed to the motor finance market, is expected to report a pre-tax operating profit of £3.5 billion, which would be up on the £3 billion reported this time last year. Investors are expecting a slowdown in mortgage lending over recent months, after a rush in activity ahead of a deadline for stamp duty relief at the start of April. And banks are set to give an update on customer savings activity amid uncertainty in the wider economic climate. Mr Greenwood said consumers are likely to have been keeping cash in accounts they can easily access rather than moving it into those with higher returns, which would mean deposits were stable over the latest period. He added that the UK 'enjoyed a strong cash ISA season, with customers looking to put money aside ahead of the Chancellor potentially introducing greater restrictions on the use of cash ISAs, which has not yet happened and now seems less likely'. Chancellor Rachel Reeves used her annual Mansion House speech this week to say retail investing had been painted in a 'negative light' and that she wanted to encourage more savers to take the leap.
The Independent
25 minutes ago
- The Independent
How the EU aims to put the squeeze on the Russian economy with new sanctions package
The European Union's 18th sanctions package against Russia over its war in Ukraine targets Moscow's energy and financial sectors to limit its ability to fund war in Ukraine. Key measures include a lower oil price cap, Nord Stream transaction ban, more shadow fleet sanctions, and a full ban on Russian bank deals. 'We are striking at the heart of Russia 's war machine,' EU Commission chief Ursula von der Leyen said in a post on X. 'The pressure is on. It will stay on until Putin ends this war.' The measures are intended to ramp up pressure on Russia amid flagging peace negotiations, as well as targeting companies and countries that allow Moscow to evade existing sanctions. They were approved on Friday after weeks of delay caused by repeated Slovakian and Maltese vetoes over natural gas and shipping respectively. Here, The Independent looks at the key measures and their potential impact on the Russian economy. Lower oil price cap The EU will impose a moving price cap on Russian crude at 15 percent below its average market price, EU diplomats said. At present this sets the cap at about $47.60 per barrel, well below the $60 maximum that the G7 have tried to impose since December 2022. A fall in oil futures made the $60 cap largely symbolic. The cap bans trade of Russian crude above the set maximum, prohibiting shipping, insurance and reinsurance companies from handling tankers carrying it. It is designed to limit Moscow's crude revenues, the cornerstone of its war coffers and economy, to make it harder to fund the war without disrupting the global oil market by cutting off supply entirely. The EU has limited powers to enforce the measure due to US resistance. Oil is largely traded in dollars with payment clearing controlled by US banks. So far Russia has been able to sell most of its oil as the current mechanism does not specify who should police its implementation. Since Russia's invasion of Ukraine, Turkey and India have also both continued to import Russian oil and refine it into products which are sent on to the EU. The EU will no longer import any petroleum products made from Russian crude, although the ban will not apply to imports from Norway, Britain, the US, Canada and Switzerland, EU diplomats said. Shadow fleet A further 105 vessels have been banned from accessing EU ports and locks, and undertaking ship-to-ship transfers of oils. The measure aims to shut down the so-called shadow fleet of older oil tankers transporting Russian oil and evading sanctions. The rise of a vast shadow fleet has been helping Moscow maintain its crude exports, keeping revenue flowing. The EU has now sanctioned more than 400 shadow fleet ships. Nord Stream gas pipelines ban Transactions related to Russia's Nord Stream gas pipelines will be banned, including any provisions of goods or services to these projects. A network of natural gas pipelines run under the Baltic Sea from Russia to Germany and were thought to represent Berlin's over-reliance on Moscow for energy. They were disabled after 2022 explosions damaged three of them. But reports in the Financial Times in March suggested that Kremlin-linked Russian and US business people were seeking their reactivation. Financial sector A full ban on all transactions with Russian financial institutions - already excluded from the Swift interbank messaging system - will come into place. The ban extends to transactions with Russia's sovereign wealth fund, the Russian Direct Investment Fund (RDIF), and its investments. The move aims to further restrict Russia's access to international financial markets and foreign currency. The EU also lowered the threshold for slapping sanctions on international financial and credit institutions which circumvent sanctions or support Russia's war effort. For example, by circumventing the oil price cap. 'We are putting more pressure on Russia's military industry, Chinese banks that enables sanctions evasion, and blocking tech exports used in drones,' EU foreign policy chief Kaja Kallas said in a post on X, without providing further details or names. When asked about the sanctions, Kremlin spokesman Dmitry Peskov said Russia has built up a certain 'immunity' to Western sanctions and adapted to them. Peskov called the sanctions illegal, saying every new restriction created negative consequences for those countries that backed them.
