Metro Bank shares have plunged further to fresh all-time lows after the challenger bank was forced to quash fresh rumours of financial turmoil ahead of a £350m rights issue.
Customers rushed to branches in west London over the weekend to withdraw money and items from safe deposit boxes following warnings on Whatsapp.
The bank said the rumours were false and attempted to reassure customers and investors that the £350m capital raise – in response to a major loans blunder – was “well advanced.”
On social media the bank insisted it was still a “safe and secure haven” for customers’ money.
But shares fell 11 per cent today to close at fresh all-time lows of 475p.
Shares have now fallen 78 per cent since the lender admitted in January that a swathe of commercial had been incorrectly classified and should have been among its “risk-weighted assets.”
"Chatter on social media that customers' money wasn't safe spiralled out of control at the weekend, with memories of the run on Northern Rock in 2007 still in many people's minds," AJ Bell investment director Russ Mould said.
"While Metro Bank has done its best to reassure customers that their money is safe, pictures of one of its branches with individuals waiting to cash out is damaging to its reputation and could hurt new customer growth, at least in the short term," he added.
Metro Bank branch in Harrow packed with people trying to withdraw funds pic.twitter.com/KXLv954jIX
— Patrick O'Brien (@pat_gdretail) May 11, 2019
Professor of banking at the London Institute of Banking & Finance, Peter Hahn, said regulators should urgently consider the "mini-run" on Metro Bank, sparked by social media.
He said: "The Metro ‘false rumours’ seemed amateur, but the panic was real; and the speed of the reaction to social media messages was sobering.
"Regulators and supervisors will need to up their game to quickly respond to repeat events – imagine if this happened to one of the largest banks?”
Pressure has mounted on the bank’s board ahead of this month’s AGM following the error, which has sparked two regulatory probes.
Metro Bank chief executive Craig Donaldson also confirmed over the weekend that the bank was considering selling a major portion of its assets.
The bank has drawn up plans to sell more than £1bn of loans from it risk-weighted assets class, the Financial Times reported.
Donaldson told the paper: “Two of our asset classes saw the risk-weighted assets held against them go up, therefore return on equity went down.
“One of the ways we could address that would be to securitise them or sell the book.”
But he said a final decision on the loans had not been made.
On Friday the bank's second-largest shareholder Fidelity Management and Research cut its 7.55 per cent stake in Metro down to 5.37 per cent ahead of the capital raising.