Metro Bank - capital ratios and stock price

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Itsmrvig
Itsmrvig Posts: 2 Newbie
in Budgeting & bank accounts
Hello all

My first post on the MSE forums so apologies if i break any etiquette rules.

I have a business bank account with Metro Bank, only recently (6mths) opened. I see they are still suffering from their miscalculation of capital requirements and have two open enquiries by the UK regulators.

In light of this I expect they will struggle to raise further capital and wondered what your views were on the resulting stability / security for their retail customers. My company account currently has more than the FCSC limit so getting slightly concerned - should i be?

Despite all of this I really like banking with them and find their services and tools to be fantastic so far!
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  • Chino
    Chino Posts: 2,029 Forumite
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    Itsmrvig wrote: »
    My company account currently has more than the FCSC limit so getting slightly concerned
    Presumably for this point to be relevant you have confirmed that your company would be eligible to make a claim under the FSCS:

    "You could claim compensation with us if you meet all the following criteria:
    ...
    4. You’re a private individual (although some businesses and charities may be eligible, depending on the type of claim)."
    https://www.fscs.org.uk/your-claim/eligibility-rules/
  • eskbanker
    eskbanker Posts: 31,070 Forumite
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    The FSCS website has less useful published information now than it used to but the rules on eligibility are defined within the FCA Handbook at https://www.handbook.fca.org.uk/handbook/COMP/4/2.html:
    Persons not eligible to claim unless COMP 4.3 applies (see COMP 4.2.1R)

    (1) Firms (other than a sole trader firm; [...]; or a small business;
    where the definition of small business is linked as
    a partnership, body corporate, unincorporated association or mutual association with an annual turnover of less than £1 million (or its equivalent in any other currency at the relevant time)
    So companies turning over less than £1m should be covered, albeit only up to the £85K limit....
  • Itsmrvig
    Itsmrvig Posts: 2 Newbie
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    Thanks both for your replies - as far as I understand it, small companies ate eligible for protection under the FSCS.

    My core question though, for which I concede there is no clear answer, is whether Metro Banks woes should cause me enough concern to switch banks. Is a Metro Bank default in the making...?

    I suppose I'm just fishing for opinions.
  • System
    System Posts: 178,094 Community Admin
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    It's almost certain that Metro would be acquired by another provider (e.g. TSB or CYBG) rather than going bust.
  • PRAISETHESUN
    PRAISETHESUN Posts: 3,723 Forumite
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    If you're worried, then open up a second account with a different bank and move the amount over the FSCS limit into it - that way you will be protected should the worst happen. That said, I don't like it's likely Metro will collapse, but stranger things have happened
  • Anthorn
    Anthorn Posts: 4,362 Forumite
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    Shades of Co-operative Bank and advice has to be the same as it was with Co-operative Bank. If you're willing to take a chance stick with Metro or otherwise move. Personally I stayed with Co-operative Bank and defended it but eventually I moved to a different bank. However Co-operative Bank recovered. According to Metro at this time they are in the final stages of agreeing funding.

    https://www.bbc.co.uk/news/business-48243155
  • tomkaier
    tomkaier Posts: 22 Forumite
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    I've had a good long think in the past few days regarding all the noise that's created surrounding the Metro Bank accounting issue. If you check their trading reports, the bank is making money, and the balance sheets can be reviewed under their press section (via their website - Press)
    I might be blue-eyed, but it strikes me as unlikely that the bank would default. Nevertheless, weirder things have happened, so hedging your risk until the climate changes might be worth your while...
  • colsten
    colsten Posts: 17,597 Forumite
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    Itsmrvig wrote: »
    re on the resulting stability / security for their retail customers. My company account currently has more than the FCSC limit so getting slightly concerned - should i be?
    Get it out asap unless you are happy to lose the amount over FSCS. It's never a good idea to ignore the FSCS limit with any bank, as any of them can get into trouble at no notice.
  • colsten
    colsten Posts: 17,597 Forumite
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    No smoke without fire.
    Metro Bank is under investigation by the Financial Conduct Authority and the Prudential Regulation Authority after hundreds of millions of pounds of commercial property loans and loans to commercial buy-to-let operators were wrongly classified as lower risk.


    https://www.theguardian.com/business/2019/may/12/metro-bank-quashes-false-rumours-of-financial-instability-

    This sounds very much deja-vue. Northern Rock, anyone?

    I am not suggesting everyone should now run and get their money out but I would certainly not leave more than £85K in Metro (or any bank, for that matter).
  • 20SmthngSver
    20SmthngSver Posts: 512 Forumite
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    Put some money in business savings accounts with other financial providers if you are worried about the FSCS protection.
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