Metro Bank boss Dan Frumkin quickly announced his commitment to shake up the banking industry on taking up his new role in February. His first job, however, was to shake up Metro, ending a difficult period when the challenger bank’s eccentric founder, Vernon Hill, departed after the loan miscategorisation scandal and former chief executive Craig Donaldson stepped down.
This week, Metro announced Mr Frumkin would have a new ally in the form of incoming chairman Robert Sharpe, who is currently chairman of Bank of Ireland UK and Hampshire Trust Bank.
Mr Sharpe is also a former leader of more traditional institutions and a confirmed dealmaker, running the Portman Building Society when it was taken over by Nationwide in 2007. Mr Sharpe will start with Metro in November.
By then, Metro could have already made a significant acquisition. The company last month entered into an exclusivity deal with peer-to-peer lender RateSetter. The size of the possible deal is unclear, given that Metro could be buying just the platform or taking over the £800m loan book, as reported by the Financial Times. The second option would involve buying out the company’s investors.
Metro was looking at a tough recovery even before Covid-19. Investec said last month that remaining shareholders would wait a few years before a return to profit.
Before the pandemic, 2022 had been floated as the year when the company would return into the black. Metro reported that deposits had increased in the March quarter, though the behaviour of its 2m customers could shift once furlough programmes start to run down.
Earlier this month, Mr Frumkin bought £570,509 in shares at 114p as part of a requirement for executive directors to own shares worth twice their annual salary. He needs to spend another £1m to hit 200 per cent of his £740,000.
His purchase came at a sharp discount on the share price of 190p when he started the job. The bank was trading at more than 2,000p in January last year.
This is an inflection point for Metro. While it is unlikely that shareholders who have held on since before the share price crash will see a positive return on their investment, the company is gaining some momentum.
Polar Capital co-founder Brian Ashford-Russell has made a number of share disposals in the wake of the asset manager’s June full-year results, which revealed a 21 per cent drop in its pre-tax profits. The asset manager has also “soft-closed” its Global Technology fund, citing its performance as well as a period of steady inflows.
Polar Capital’s year-end figures were affected by its performance fees, which slumped by nearly two-thirds to £8.8m over its most recent financial year, down from a record £24m level in 2019. Its Global Technology fund led the way on net inflows, with inflows of £316m.
At the end of June and following the release of its results, the asset manager elected to temporarily close the fund as it edged towards £4.5bn in assets under management. The fund grew by 39.3 per cent in the 12 months to May 29, 2020, outperforming the Dow Jones Global Technology index that grew by 37 per cent. It had £4.2bn in AUM at this point.
The shares have staged a recovery since the spring sell-off and sit at about three-quarters above their March nadir. Mr Ashford-Russell has capitalised and made four disposals between June 24 and July 3, pocketing £2.7m. A spokesperson said that the co-founder is “diversifying his portfolio and helping to improve Polar Capital’s free float and liquidity”.
Mr Ashford-Russell also sold £1.2m in shares last year. He retains a 4.7 per cent stake in the business and is among the asset manager’s top 10 shareholders.
The disposals will not do much to instil confidence among investors during a period of great market uncertainty.
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