Q&A So what is going on at Metro Bank?
Queues of worried customers. Shares down 87pc. WhatsApp rumours...
MeTro Bank is not having a good year. its shares have plummeted and rumours about the lender’s health have sparked queues of worried customers outside branches.
The modern-day bank, which now has 1.7 million customers, became Britain’s first new High Street lender in more than a century when it opened branches in the wake of the financial crisis in 2010. Founded by U.S. billionaire Vernon Hill, the bank prides itself on being different. it opens seven days a week and welcomes dogs. it calls branches ‘stores’ and customers ‘fans’.
Children can use the bank’s Magic Money machine to count their piggy bank savings, while adults get fee-free transactions in europe.
But, in January, the lender revealed an accounting error that prompted an ongoing investigation by the City watchdog. The bank had underestimated the riskiness of property loans and, as a result, its reserves were not as robust as they should have been.
Since then, shares in the bank have fallen by 87 pc in just 14 months, with concerns over management and repeated pleas for investment fuelling fears over its future. Then, as reports over the weekend revealed Metro Bank is expecting a £350 million cash injection from investors, false rumours circulated on text message service WhatsApp that the bank was facing financial difficulties.
The message urged savers to withdraw their money from accounts and safety deposit boxes. This led to pictures of queues of customers at London branches being posted on social media.
So what does all this mean if you are a Metro Bank customer and, most importantly, is your money safe?
WHAT IS THE BANK SAYING?
MeTro Bank firmly denies the rumours it is facing financial difficulty, confirming it remains a profitable bank.
A spokesman says: ‘ We’re aware there were queries in some stores over the weekend about safety deposit boxes following false rumours about Metro Bank on social media and messaging apps. There is no truth to these rumours and we want to reassure our customers that there is no reason to be concerned.
‘We’re a profitable bank, rated number one for personal current account service by the Competition and Markets Authority and committed to serving 1.7 million customers.’
According to the bank, the £350 million is not being raised to allow it to continue operating, but to grow its 67- strong branch network and online services. Metro Bank says it had increased inquiries about deposits on Saturday in some stores in West London, but this has returned to normal.
IS MY CASH PROTECTED?
ASide from the bank’s reassurances that it is profitable, customers are protected by the Financial Services Compensation Scheme (FSCS).
Under the FSCS, anyone who holds money in a UK-authorised bank, building society or credit union that fails will be compensated up to £85,000 per person, per bank, or £170,000 for joint accounts, per bank.
if you have more than this with any one banking institution, experts recommend withdrawing the extra money and putting it somewhere else to ensure you are covered.
However, temporary high balances are covered under the compensation scheme — such as money from a house sale, an inheritance, redundancy pay outs or personal injury claims.
ARE SAFETY DEPOSITS SAFE?
THe FSCS scheme does not protect the contents of a safety deposit box. However, Metro Bank has confirmed it does not take ownership of the contents of boxes. This means that what is in your box remains yours and not the bank’s regardless of what happens.
Metro Bank customers can continue to use safety deposit boxes as normal during store opening hours.
Many of the customers seen queuing at the weekend were said to be concerned about their deposit boxes.
ARE SMALL FIRMS STILL PROTECTED?
THe FSCS protects the balances of small firms, limited companies and charities, and does not carry out a size test. To find out if your deposits are protected, go to fscs.org.uk/contactor call 0800 678 1100.
HOW DO I CLAIM COMPENSATION?
THe FSCS will compensate you automatically. it aims to return your money within seven days of any bank or building society failing. Complex claims can take up to 15 working days.
WILL BRANCHES HAVE TO CLOSE?
MeTro Bank says it has no plans to close stores or reduce its 8am-to-8pm opening times. it also plans to press ahead with planned new openings.
Most of the bank’s stores are in London and the South-east, but it aims to open branches in Manchester and Liverpool this year. Stores are also being built in Birmingham and Cardiff.