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Metro Bank’s billionaire enrichment project

Outlook

Jim Armitage
Wednesday 28 October 2015 02:00 GMT
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Metro Bank batted a reader away when he raised concerns about pre-pay cards
Metro Bank batted a reader away when he raised concerns about pre-pay cards

As a fan of challenger banks, I’m pleased to see Metro doing a roaring trade. It put on another 57,000 customers in the past quarter, boosting deposits to £4.4bn. That makes a flotation all the more likely next year, perhaps triggering bonus shares for customers like me.

With its cuddly customer service ethos, including branches featuring free doggy biscuits and coin-counting machines for children, Metro gives the impression of being a touchy-feely organisation. But there’s nothing touchy-feely about its backers. Among them is Steven A Cohen, the hedge fund squillionaire said to have one of the finest art collections in the world. His SAC Capital Advisors was charged by Wall Street regulators with failing to prevent insider trading in what was one of the biggest scandals in the US since the financial crisis. While Mr Cohen himself was never charged with any crime, a number of his team were. The company as a whole pled guilty, paid a $1.2bn (£800m) fine and agreed to stop managing funds for outside investors.

Another backer is Ken Moelis, a Wall Street titan who cut his teeth working for notorious junk bond king Michael Milken in the 1980s. After stints at Credit Suisse and UBS, he set up his own advisory firm, which has built up a reputation as being a tough negotiator in bitter corporate debt fights. Here in the UK, Mr Moelis is famed for advising hedge funds over the controversial restructuring of Co-op Bank.

Michael Bloomberg, the former mayor of New York and billionaire owner of the Bloomberg financial data group, is another investor – as is property mogul Richard LeFrak. Mr Bloomberg’s holding is part of the passive Willett Advisors fund, which manages his money for him, so it’s unlikely he’s much of an expert himself in the company – but Mr LeFrak clearly did his research. He recently told one of Mr Bloomberg’s reporters that he invested because he’d noticed how bleak British bank branches were, looking “like off-track betting parlours”. Can’t fault him there.

This golden crew, plus a few more hedge funders, make Metro’s forthcoming float a huge exercise in the further enrichment of Wall Street billionaires.

Remember that next time a smiling Metro teller offers your pooch a treat.

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