Metro bank tells savers not to panic as threat of legal action subsides

The bank, which has had a tumultuous few months since it disclosed in January a major accounting error where incorrect risk-weighting was applied to £900m worth of loans which has subsequently seen £4.5bn wiped off its market value.

After the subsequent slump in profits the lender has seen an increase in customers coming into its west London branches concerned about its solvency after a WhatsApp message advised people to pull money out of their accounts and empty safe deposit boxes.

Reacting to the panic, Metro Bank said: “We’re aware there were increased queries in some stores about safe 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 No 1 for personal current account service by the CMA and committed to serving our 1.7 million customer accounts.”

The bank’s plea for calm comes even after the bank appeared to be handed a lifeline after some investors stepped back from the threat of legal action over the recent accounting blunder.

Shareholders, many of whom had approached a number of law firms earlier this year after a major accounting error wiped £800m from Metro Bank’s share price, are understood to have concluded that a legal claim could “destroy” the bank.

A lawyer involved in the discussions is reported to have told The Sunday Telegraph newspaper that after months of considering a case there was now “no appetite” for a legal battle, which could have ended up in court and added to its woes.

However, investors are braced for a second cash call in twelve months after a £300m raise last July. The bank said that plans for a fresh £350m equity raise are “well advanced” and will conclude in the first half of 2019.

And today, ISS, the prominent shareholder advisory and services group has recommended investors reject Metro’s pay report on the grounds that it includes a £280,000 bonus for finance chief David Arden which ISS deems to be unwarranted.”given recent shareholder experience”.

Metro Bank shares have have dropped 6.8% to 496 pence each. In March 2018, they traded at more than £40 each.