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WRAPUP 1-Britain's mid-sized banks coping with coronavirus, but warn of pain ahead

Wed 6th May, 2020 10:31am
* Virgin Money in the red after coronavirus provision
    * Metro Bank deposits rise but no guidance on pandemic
    * OneSavings Bank reports steady lending, margins

 (Adds details, quotes, analyst comments)
    By Iain Withers and Sinead Cruise
    LONDON, May 6 (Reuters) - A slew of Britain's mid-sized
banks on Wednesday reported steady deposits and demand in the
face of the COVID-19 pandemic, but warned it was too early to
assess the long-term damage of the outbreak to their businesses.
    Virgin Money  VMUK.L  swung to a first-half loss after
booking a 232 million pound ($288.6 million) provision for bad
loans and likely defaults due to the pandemic, but reported a
higher than expected capital buffer of 13% that steadied
investor nerves.
    The bank, which became the UK's sixth-largest lender
following its takeover by CYBG, reported a pre-tax loss of 4
million pounds for the six months ended March 31, compared to a
50 million pound profit a year earlier. 
    Smaller rival OneSavings Bank  OSBO.L  said its net loans
and retail deposits held firm in the first quarter, as did its
2.66% net interest margin - a key measure of underlying
profitability - despite the tough market conditions.*:nL8N2CO2D2
    "It is too soon to say what the longer term impact will be
on our business, but we entered this period with a strong and
secured balance sheet, sensible LTVs and strong risk management
capabilities, equipping us well to navigate the current
situation," OneSavings Bank Chief Executive Andy Golding said.
    Shares in Virgin Money gained 6% at 0853 GMT, while
OneSavings was up 3%.
    Metro Bank  MTRO.L  failed to reassure its investors with
its thin quarterly trading update, reporting a modest dip in
lending alongside a 77 million pound rise in total deposits. Its
shares fell 5%.*:nFWN2CN126
    Metro entered the crisis in bad shape after an accounting
blunder last year decimated its stock market value, forced out
its top bosses, and triggered an ongoing regulatory
    The bank said it remained "difficult to predict with any
certainty" how the outbreak would impact its customers and would
provide an update when it reported half-year results, but said
key capital ratios remained in excess of regulatory minimums.
    "Metro's limited Q1 trading update may be a hostage to
fortune in terms of what it does not disclose as opposed to what
it does," Jefferies analyst Joe Dickerson said in a note.
    Unlisted Co-op Bank reported a further quarterly pretax loss
- of 27 million pounds - but said this was in line with company
expectations. It booked benign impairment levels.
    The flurry of updates comes after Britain's biggest banks
RBS  RBS.L , Lloyds  LLOY.L , HSBC  HSBA.L  and Barclays
 BARC.L  set aside 6.7 billion pounds in provisions for likely
loan losses last week.*:nL8N2CJ0YO*:nL3N2CG43X*:nL3N2CG1BW*:nL5N2CH1QO
    The government imposed a lockdown in late March to contain
the spread of the new coronavirus, bringing the economy to a
near halt and making it tougher for some businesses and
consumers to pay back loans on time.
    Virgin Money also said it would delay the rebranding of
Clydesdale and Yorkshire Bank for a year due to the impact of
the crisis, although Chief Executive David Duffy told reporters
the bank was committed to doing this over time.
    Citing a lower capital buffer relative to peers, analysts
had been concerned Virgin Money might need to raise additional
capital, but a common equity tier 1 ratio of 13% was welcomed by
analysts at Citi as "a big positive".
    Virgin Money Chief Financial Officer Ian Smith said the bank
still had "a very substantial buffer" to the regulatory
requirement of 10%.
($1 = 0.8040 pounds)

 (Additional reporting by Muvija M; Editing by Jan Harvey)
 ((; +44(0)207 542 3330;))

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