What's going on?

Metro Bank, a David to the Goliaths of British banking, reported a drop in its quarterly profit late on Wednesday � but the real challenge was to its share price, which investors slung down 16%.

What does this mean?

A major accounting error by Metro Bank revealed a gaping hole in the company�s coffers back in January � one it plans to fill by selling new shares to investors. And Metro�s quarterly update laid bare the effect of the scandal on its business: some of its biggest corporate customers pulled their cash, leading to it holding fewer deposits than in the previous quarter. Less money in the kitty further restricts Metro�s financial flexibility.


One of the old guard, Lloyds (with roots in the 1600s), reported disappointing quarterly results on Thursday too. Stiff competition in the mortgage market (including from Metro) plus Brexit-related consumer nervousness may be to blame for Lloyds� llackluster profit.

Why should I care?

For markets: Investors in banks are angry � and who can blame them?

There was one silver lining for investors frustrated that the gulf between European and US banks appears to be widening. The Bank of England announced on Thursday that it may raise interest rates sooner than thought, which would help UK banks earn more from making loans. Speaking of angry, UBS�s investors refused to vote in support of the Swiss bank�s management on Thursday after the company was found guilty in February of helping wealthy clients avoid French taxes. Barclays� troublesome activist investor, however, failed to get enough shareholder support to force the British giant to abandon investment banking.

The bigger picture: Some banks are turning a corner.

The world�s eight-largest bank, France�s BNP Paribas, on Thursday reported a higher-than-expected quarterly profit, thanks to ongoing cost cuts and an upswing in revenue from those very same investment banking activities deemed too risky for Barclays by some. Investors selling other banks� stocks may have been buying BNP instead � its shares rose.