Metro Bank is one of the high street ‘challenger banks’ that was set up in the aftermath of the 2008 financial crisis. It has always emphasised its high-quality customer service and what it characterises as a lack of ‘stupid bank rules’.
Now though, the bank is in serious trouble for failing to follow some of the Financial Conduct Authority’s bank rules and misstating the amount of capital it had on hand.
This has caused the company’s share price to plummet and also raised a number of other corporate governance issues for the bank.
Despite these issues, Metro Bank claims that its underlying business is solid and that it plans to go ahead with an aggressive expansion programme that will see it opening a branch (or ‘store’, as Metro Bank prefers to call them) in the North of England for the very first time.
Will Metro Bank Be Able To Survive?
So long as there are no other shoes to drop, then the underlying picture at Metro Bank looks good. What has irked shareholders however is the bank’s apparent struggles in recognising the issue and taking ownership of the solution.
Metro Bank has never been particularly responsive to investor pressure and its founding chairman has long been known for an ‘it’s my way or the highway’ attitude, particularly when it came to decisions such as appointing an interior design firm owned by his wife.
Metro Bank’s severing of ties with this company after a decade could be a sign that the bank is preparing to take a more disciplined approach to corporate governance than it has in the past.
While the bank’s future doesn’t seem to be under threat, its low share price, coupled with a weak pound could make it a takeover target.
A number of UK banks have been bought by foreign suitors over the last decade or so and it could well be that Metro’s size and focus on economically prosperous areas of the country make it an appealing prospect for a foreign operator looking to break into the UK market, any rumours of this would give the share price a much needed shot in the arm.