Metro Bank’s RBS money in danger as it dives 20% on £350 million share placement

METRO Bank was today fending off suggestions it may lose a £120 million bursary won only last week as part of government plans to boost competition in banking.

Under-fire chief executive Craig Donaldson, already reeling from an accounting blunder, today saw shares in the bank crash 20% to 1051p.

That was in response to a £350 million share placement unveiled last night to fill a hole in the books left by the miscalculation on the value of loans.

Donaldson offered to resign but says the board want him to stay. He will forfeit his 2018 bonus.

Rivals were already surprised that Metro landed the biggest chunk of money from a Royal Bank of Scotland fund being paid out as part of its 2009 bailout.

In light of the accounting problems and today’s share placing — “a shambles”, said one bank analyst — those rivals are expected to complain to the Treasury and the Banking Competition Remedies body about Metro’s win.

John Cronin at Goodbody said: “I have to reiterate that I am very surprised at BCR’s decision to award Metro £120 million of funds and that comment is not made on the basis of hindsight following yesterday’s news. Metro’s problems have been identifiable for a long time.”

One bank rival said: “I think the decision to award Metro Bank the full £120 million casts serious questions on the judgment of the decision-makers.”

Donaldson insisted Metro would make good use of the money, that it continues to attract new customers and is the best placed of the challenger banks.

Asked if Metro could forfeit the funds, Donaldson said: “there is no reason to think so.” Of the plunging share price, he said: “I can’t manage the markets. I can manage the bank.”

Analysts note if Donaldson were forced out, a new CEO may not have the same commitment to opening branches, part of the reason why Metro landed the cash in the first place.

Donaldson said: “The organisation is up to it. It is already mobilised. It is not about one individual.”

The shares are down from more than 4000p a year ago.