Metro Bank ordered to refund customers £11.4 million ahead of Q1 results
The UK challenger bank was ordered by regulators to repay millions in overdraft charges to its customers ahead of its first quarter results on Wednesday.
Metro Bank was ordered by the UK Competition and Markets Authority (CMA) to repay £11.4 million to customer for overdraft charges ahead of its first quarter (Q1) results on Wednesday 29 April.
Around 130,000 Metro Bank customers will receive average payments of approximately £86 after the lender failed to adequately warn its customers about unarranged overdraft charges.
‘We are very sorry that we didn’t include all the information we should have done on our overdraft text alerts, and that on certain occasions some customers did not receive these alerts before 10am as they should have done,’ David Thomasson, Metro Bank chief commercial officer, said.
‘This isn't the level of service that we pride ourselves on providing and we are now contacting any customers who have been impacted to put things right for them as quickly as possible,’ he added.
The fine is a blow for Metro Bank, with the lender eager to cut costs after a disappointing performance in 2019 due to an accounting error that caused it to play down the risk of a significant proportion of its mortgage loans which caused it to exaggerate the strength of its balance sheet.
The accounting error prompted regulators to launch an investigation into what went wrong, while the bank’s share price collapse with the stock showing no signs of recovering any time soon.
Société Générale downgrades Metro Bank
Analysts from Société Générale have downgraded Metro Bank from a ‘buy’ rating to ‘hold’ ahead of its Q1 earning on Wednesday.
The French investment bank also lowered its price target for the stock to 100p a share, which implies that the challenger bank is unlikely to see significant gains in the near-term.
Metro Bank closed at 93p a share on Monday.
PRA requests UK banks suspend dividend
Much to the disappointment of shareholders, Britain’s largest lenders complied with guidance from the Bank of England (BoE) and suspended dividend pay-outs in 2020.
Barclays, Lloyds, Royal Bank of Scotland, HSBC, Santander and Standard Chartered all said that they would cancel their dividends for the 2019 financial year and agreed to refrain from making any pay-outs to shareholders in 2020. The banks even promised to cancel any share buyback initiatives too.
The Prudential Regulation Authority (PRA), the supervisory division of the BoE, welcomed the dividend cancellations and not having to take any formal action against any UK banks.
The PRA hopes that by keeping cash on lenders balance sheets, rather than in shareholders pockets, it will help the industry offset some of the impact of the Covid-19 crisis.
The regulator also expects banks not to pay any cash bonuses to senior staff over the coming months.
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