United Kingdom lender secures new capital to ease immediate peril, with few signs of a wider crisis
It has been a dramatic few days for all sorts of reasons. On another weekend there is a good chance the business press would have been transfixed by the Metro Bank saga, as the so-called challenger bank in the UK battled to find a buyer after a collapse in its share price and bonds last week left it struggling to survive.
The lender is one of several banks to emerge out of the wreckage of the 2008 crash to challenge the established big players in consumer banking. Much like in Ireland, the big banks in the UK were weighed down with bad loans and high costs after the crash leaving them wary of new customers. That created a gap in the market for new entrants who did not have to deal with the so-called legacy issues of the past.
Metro Bank was different from its peers in that it actively sought out a high-street presence, investing heavily in a branch network with some in high profile, high-cost locations in central London. That was a tactic its rivals deliberately avoided as a needless expense in a digital age.Metro’s valuation soared as high as £3.5 billion in 2018 and added more than two million customers quickly.
Some good news though: this appears to be a very specific issue with one bank. Unlike other bank failures of yore, there is no indication of any wider crisis. At least for now.
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