May 13, 2019 / 10:26 AM / 12 days ago

Metro shares slip after British bank moves to reassure customers

LONDON (Reuters) - Metro Bank shares fell on Monday after weekend social media postings led to customer queues at some London branches, prompting the British bank to reassure depositors and investors.

FILE PHOTO: A logo is seen on the outside of a branch of Metro Bank in central London July 28, 2010. REUTERS/Toby Melville/File Photo

“We’re aware there were increased queries in some stores about safe deposit boxes following false rumors about Metro Bank on social media and messaging apps,” a spokeswoman said.

Metro Bank has been battling to shore up confidence after a major accounting error in January wiped more than 1.5 billion pounds off its market value and forced it into a 350 million pound ($455 million) fundraising.

Pictures on social media showed queues of customers at Metro Bank branches in West London, with Twitter users reporting that concerns about safety deposit boxes had been raised on community WhatsApp groups in the area.

“There is no truth to these rumors and we want to reassure our customers that there is no reason to be concerned,” the spokeswoman said as Metro Bank reiterated that it never takes ownership of customer items held in safe deposit boxes.

Metro Bank shares, which were initially down nearly 9% on Monday, were down 3.2% at 0945 GMT, giving the lender a market capitalization of 520 million pounds, Refinitiv data shows.

The bank also said in response to reports that it was struggling to raise capital that its plan was well advanced.

Customer deposits are guaranteed up to 85,000 pounds if a bank gets into financial difficulties, while post-crisis rules mean lenders are now structured to ensure deposits can be moved to another bank more easily to ensure continuity of service.

The Bank of England declined to comment on Metro Bank, which a source told Reuters is also considering selling around 1 billion pounds of loans where the risk-weighting had been miscalculated to help alleviate its financial stress.

Analysts at Barclays said that while this would help, it would be tough to find an acceptable price as “we would expect Metro Bank to currently be considered a distressed seller”.

Reporting by Iain Withers and Huw Jones; Editing by Alexander Smith

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