UK high street challenger bank Metro Bank has scaled back its expansion plans in the fallout of the accounting error that stripped £900m off from its value.
The lender is also going to give back almost half of the £120m awarded to it from a Royal Bank of Scotland (RBS) scheme to boost competition, The Guardian reported. The scheme is part of RBS’ £45bn bailout deal with the government.
The money was granted just weeks after it was revealed Metro Bank had misclassified £900m worth of loans a being less risky than they were. When the error was revealed, the company’s shares tanked. The bank is still being investigated by the Financial Conduct Authority and the Prudential Regulation Authority for the accounting error.
Metro Bank is also facing a class-action lawsuit in the US over the accounting blunder.
Following the setback, Metro Bank traded at a record low level. Attempting to put its financials back on track, it tried to whip up some excitement about with two new bond offerings in the Autumn of 2019. The first bond offering attempt failed, the second succeeded.
As the problems grew, Vernon Hill, the founder and chairman of Metro Bank, announced that he would leave the bank entirely in the beginning of January 2020.
There has been some highlights though.
Metro Bank did sign three FinTech partnerships in October with SME loan comparison platform Funding Options, commercial trade finance company Conance and risk management firm DueDil.
In November it was announced that James Gilinski Bacal, a Colombian investor, had bought 4.3% stake in Metro bank.
Starling Bank had also been a beneficiary of the RBS scheme. However, it find itself having to tackle some bad press after it was revealed in December that it had only lent roughly 1% of the promised £913m it had said it would lend to small businesses as part of the investment.
Starling Bank responded that it was only at the beginning of its four-year commitment.
Copyright © 2020 FinTech Global