Another massive bank is now at risk of collapsing as it struggles to put together a rescue takeover, reports the WSJ.
“Investors have been jittery for months about banks, after the implosions of Silicon Valley Bank, First Republic, Credit Suisse and others,” says Caitlin McCabe.
“Metro Bank was hobbled by company-specific problems”, S&P Global Ratings said Monday—primarily due to “subscale, high-cost business model” and a less efficient balance sheet than bigger peers.
Metro Bank was initially set out to compete with Barclays and NatWest, which at first began to attract deposits quite well.
However, the bank “struggled with poor profitability and a big real-estate footprint, as well as problems with loan accounting in 2019,” per WSJ.
Shares of the bank are currently down more than -61% this year-to-date.
On social media, crypto enthusiasts continue to point out the instability of the banking sector.
In a research note, Christopher Cant, a senior analyst at Autonomous Research, recently singled out “long term, unbreakable, and expensive leases” as a key headache.
“Metro Bank has lined up a £925 million financing deal, including £150 million of new stock and £175 million of fresh debt.
The rest of that sum comes from a refinancing of existing debt, which will impose a 40% haircut on holders of some riskier bonds.”
However, the bank’s shareholders will be negatively impacted.
“Shareholders who can’t or won’t take part will see their stake diluted by about two-thirds, Gary Greenwood, an analyst at Shore Capital Markets,” said in a note Monday.
Billionaire Colombian backer Jaime Gilinski Bacal is injecting £102 million and will become the bank’s majority owner, with a 53% stake.
Other Banking News Today
More than 1000 bank branches have now shuttered this year according to fresh data from the S&P Global Market Intelligence.
“The majority of Americans are concerned about widespread bank branch closures – which are hitting lower-income households the hardest.
Growing numbers of people are being left without access to basic financial services, as big-name banks have axed more than 1,000 branches already this year,” reports DailyMail.
“Data from S&P Global Market Intelligence shows a total of 1,144 national and regional banks were closed between January 1 and July 31 across 49 states – with firms pulling out of some areas at a faster rate than others.“
Wells Fargo is now scheduled to close 100 branches this year according to records from the Office of the Comptroller of the Currency (OCC).
“While the total number of branches continues to decline, new branches are being opened in high growth neighborhoods of existing markets, allowing us to offer more branch convenience,” the bank said.
A survey by DailyMail has found that 51% of Americans are ‘very concerned’ or ‘somewhat concerned’ about the impact of “dwindling outlets”, which disproportionately affect poorer households.
According to the analysis by research agency Opinium, 10% of Americans with a household income less than $50,000 said they do not have a local bank branch.
Grace Miller, research manager at Opinium, said: “Despite the majority of Americans preferring digital payment methods over cash, recent bank closures across the United States are still causing concern.
Notably, the digital transition showcases disparities in accessibility, especially for Americans with lower household incomes.”
According to the latest data, PNC has been the worst offender, shuttering a total of 201 bank branches in just seven months.
U.S. Bank and Wells Fargo were close behind, having closed 185 and 160 branches respectively.
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