Metro Bank: What have they Been Doing? Why Are They In The News?

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Unless you’ve been living under a rock for the past week, you might have heard that not all is well at Metro Bank. They have proven to be the Daenerys Targaryen of the Challenger Bank World; early years showing such promise, which the recent weeks developments, may have led you to seriously question. 

A bit of background. - Metro Bank was founded by in July 2010 in by charismatic American multi-millionaire Vernon Hill. Known in the industry as ‘Vernon the barbarian’, this savvy digital guru refuses to travel anywhere without his Yorkshire terrier, Sir Duffield. And if that isn’t reason to run down to you local branch now, forgive them for recent mistakes and demand to open an account with them, I don’t know what is. 

It launched to an air of huge optimism. The first new bank on the UK high street (yes that blessed institution of all things good and British), in 150 years…

It was the first true challenger bank in the UK, opening up an industry that was ripe for destruction! They did crazy things, like being open on a Sunday. Shocking stuff. 

Metro were the John the Baptist of the Challenger Banking world, giving bloody noses to the incumbents before the likes of Revolut, Monzo or Starling had their UK banking licences. 

Well done Metro – good job!

 So what went wrong? What has changed? 

Well on first glance; this really doesn’t look like their fault. They have arguably been the casualty, in the intervening 9 years, of the proliferation of challenger banks and the incumbents improving their customer offering. You could potentially argue, with a few recent examples, hubris slipped in. 

An accounting blunder in January and a lack of clarity in where additional funding was coming from had got the markets nervous.  

Most explicitly though, they were victims of a cynical WhatsApp campaign.

The postings on the Facebook owned messaging service, which has become ubiquitous in recent years stated, falsely, that Metro Bank 'may be shut down or going bankrupt' going further by citing a BBC article that their ‘share price has dropped 85% since last year and they may not get funding. This message went viral across the UK. 

This caused a rush of customers looking to close their Metro accounts, which whilst not quite Northern Rock in 2008, would be enough to get regulators nervous. Metro has made clear the falsehood in these claims and that customer savings are very much safe. 

All this has meant that shares have fallen from 4040 pence high in March 2018 to 672 pence today. 

This is a fast moving news story and sure to have developments in the coming weeks. The full extent of the damage will not be known until Metro release their next quarterly results, and one should not make dogmatic assumptions until these numbers are released. There is no need at this stage for the nervous echoes of 2007-8 to have dominance. 

However, whatever happens; and I personally believe and hope that Metro come back fighting. They were the brand that laid the footsteps for the UK fintech unicorns to exist. They offered something that at the time was revolutionary, and until very recently did a very good job at delivering it. 


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