SHARES in Metro Bank tanked after the lender revealed the impact of a major accounting error and subsequent investor cash call in what it described as a "challenging" first quarter.
The high-street lender's shares plunged over 15 per cent in morning trade after it unveiled a dismal set of first quarter figures late on Wednesday, before recovering to 11% lower at 688p.
In January, Metro flagged that it had miscalculated the risk weighting of commercial loans secured on property and certain specialist buy-to-let loans.
It later unveiled a £350 million cash call to make up for the shortfall on its balance sheet.
The share price collapse comes off the back of fresh figures showing quarter-on-quarter deposit growth was affected by some major customers withdrawing during the fallout from the debacle, resulting in a 3.6% reduction.
Total deposits stabilised in March and returned to growth in April.
Compared to the same time last year, deposits were up 19% to £15.1 billion.
Underlying profit before tax sank to £6.9 million, compared to £10 million in the same period last year. On a statutory basis, pre-tax profits fell from £8.6 million to £4.3 million.
Customer numbers grew faster than the equivalent period last year, as 97,000 new accounts took the total to 1.7 million.
Michael Hewson, analyst at CMC Markets, said: "If management were hoping to avoid greater scrutiny by giving analysts limited time to peruse the numbers then this morning's share price action suggests that while they may have avoided some difficult questions, the numbers more or less speak for themselves.
"They also raise important questions over not only the quality of management's oversight policies but also the auditors themselves."
To compound matters, shareholders have been urged to vote against the re-election of founder and chairman Vernon Hill amid the fallout from the accounting blunder.
Investor advisory firm Glass Lewis has recommended that shareholders reject Mr Hill's reappointment at the lender's annual meeting this month, citing millions in payments made by Metro to his wife's architecture firm InterArch.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here