Yahoo Finance How safe is your money with Metro Bank?
Metro Bank (MTRO.L) has quashed rumours about its financial health following a false social media scare caused hundreds of customers to flock to withdraw cash and valuables from safety deposit boxes at a West London branch.
David Buik, a City commentator speaking to LBC, said that this is “not a time for panic. This is a time for a pragmatic outlook.
"Metro Bank's been under the lash from short hedge fund sellers. The share price has gone down from £40 to £5 and change in the last 14 months.
"Consequently, it requires some extra capital, about £350million, which they are going to have to get from their shareholders to meet the regulatory requirements of the FCA.”
The group has confirmed customers money is safe and plans to raise £350m equity to support its growth is “well advanced.”
In a statement the bank said: “Metro Bank has commenced final discussions with existing shareholders and new investors, and the feedback continues to be positive.
“The equity raise, which is subject to the committed standby underwriting agreement announced on 26 February 2019, is expected to be by way of a placing subject to shareholder approval. The Company intends to respect the principles of pre-emption as far as practicable via the allocation process.
“As stated at the time of Metro Bank's Q1 results in May, the equity raise will be completed (subject to approvals) by the end of Q2 2019.”
If a bank, building society or credit union does go bust there are protections in place for consumers under the Financial Services Services Compensation Scheme.
The scheme covers losses of up to £85,000 per person or £170,000 for a joint account if one those types of financial institutions goes bankrupt.
The FSCS also protects temporary high balances in your bank account of up to £1m for up to six months from when the amount was first deposited. This covers certain life events such as a sale of a property, redundancy, personal injury compensation or benefits payable under an insurance policy.
Metro Bank’s share price has lost more than 70 per cent of its value after investors became alarmed about the firm after an accounting error was uncovered in January.
