SHARES in high street lender Metro Bank have dived by more than a quarter overnight.
It comes after it revealed it is mulling over fundraising or selling off assets in a bid to shore up cash.
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The bank is reportedly looking to raise around £600million in capital to help it refinance debts.
It said it was looking at a range of options including a combination of equity and debt, as well as possible asset sales.
But it stressed that “no decision has been made on whether to proceed with any of these options”.
City regulators are reportedly in talks with the bank following the drop in its share price.
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Earlier this year, Metro Bank said that it had worked on “fixing issues of the past while positioning itself for the future” as it revealed it had made a profit over the first half of the year.
The bank, which has 76 branches known as “stores”, cheered completing a turnaround plan at the end of 2022 after cutting costs and winning new customers.
It is one of the UK’s top 10 banks with around 2.7million customers, after being the first new lender to launch high street branches in 2010 in more than 100 years.
But while the news of its fundraising efforts has now been made public, customers have little to worry about.
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The bank is operating as normal and customers can still go about using its services as they would on any given day.
Their cash is also not at risk, so there’s no need to make a withdrawal.
In fact, even if your bank failed, you could claim back up to £85,000 of your money through the Financial Services Compensation Scheme.
How are my deposits protected?
Following the global financial crisis, which first led to a run on British Bank Northern Rock, the government upped the amount of compensation paid to retail customers if their bank was to go bust or collapse.
If your bank, building society or credit union now went bust, you’re entitled to compensation through the Financial Services Compensation Scheme (FSCS).
This is also the case for joint accounts and if you have money with two banks in the same banking group.
The FSCS can compensate people who end up out of pocket if a bank or other financial services provider goes bust.
It also helps people who lose money because of poor advice from a financial adviser or organisation that has since gone out of business.
What does the FSCS cover?
You’ll be covered under the scheme if you’ve lost money in deposit accounts with a bank, building society or credit union if the firm fails.
This is as long as you don’t have more than £85,000 with a single bank.
If you have a joint account, the FSCS deposit protection limit is £170,000.
You can find out if you have accounts with banks that are part of the same financial institution by using Which?’s ‘Who owns who in banking?’ calculator.
If you have a temporarily high balance, you could get more protection under the FSCS for up to £1million.
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For example, you sell your home and so have an unusually high balance in your account.
When a bank, building society or credit union goes out of business, the FSCS will automatically pay out depositors with eligible deposits up to £85,000.
