The US expansion (currently still in beta mode)?
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Yeah that was my thought. New CEO is from that side of the business.
Or could just be to plug a pandemic gap I guess.
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Probably a bit of both!
I wouldn’t be surprised if it was to remove the “going concern” issue from the accounts.
They’ve raised enough money that would comfortably pay for another year of losses, even if they didn’t reduce going forwards. Hence no issues from a going concern perspective.
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I don’t think it would affect that? Going concern is about whether the business can be sustained indefinitely or not on the current basis, not whether it will last a year, I thought.
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I think so, otherwise all unprofitable businesses would have going concern notices in their accounts?
Accounts are produced annually, so they’re really commenting on their ability to function in the year ahead (I think) - any accountants on here can probably confirm.
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I think ability to raise money either through taking on debt, fundraising etc is also taken into account so either way it’s not any unprofitable business.
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With the capital requirements that the BoE have laid down being rather extreme, it could be they simply need to have more cash on hand to be able to keep lending/increase their loans and overdrafts portfolio. Which I guess could qualify as “an expansion of sorts”
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Hmm possible but seems unlikely, I think they’d only lent out about 25% of deposits at last count. The requirements are more like keeping it below 90% right?
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For Monzo the requirement was, if I recall correctly, below 49% (that is, 51% of their capital had to be liquid), which was huge when compared to other banks, and even Starling and Metro Bank.
Assuming your 25% deposits lent is correct, 51+25 doesn’t leave much wiggle room. Hence my thought that if Monzo are looking to grow their loans book, they need added capital for some more comfortable breathing space.
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I don’t really understand, but I believe some of the requirements are because we hold so much of our capital at BoE and don’t lend it out in the way traditional banks do.
It all goes over my head though 
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Of course. Even so, I expect the statement to be removed at the next accounts. Whether because of significant amounts raised (ability to absorb losses), or the fact they’ve actually got a lot more cash coming in now, and hopefully have got their costs down a bit.
Hopefully the restrictions from the BoE are scaled back too. The fact that Monzo would be seen as more of a risk than Metro is laughable.
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I think their main revenue must have taken a big hit from lack of travel
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A person close to the firm said the top-up comes after Monzo fielded more demand from investors in response to “strong revenue growth and performance despite the pandemic”.
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An important note to make is that banks don’t ‘lend deposits’. They create new money by making loans. Deposits, for example, are liabilities on a bank’s balance sheet, as this is money a bank owes its customers. Banks are required to maintain a liquidity buffer (you’ll see this referee to as LCR) to ensure that the bank is operating within regulatory limits to cover its liabilities and mitigate solvency risk
When a bank makes a loan, it creates an asset, which generates income for the bank. Crudely, the more assets they create, the more capital they’ll need to hold to absorb any potential losses from non repayment, also serving to mitigate the probability of insolvency.
There are various types of capital (each with a different ranking in the waterfall) that serve at act as that buffer but the key measure for Monzo will be its CET1 ratio, which is very high relative to big balance sheet banks’ CET1 ratios.
The Bank of England published this very good primer on money creation and the role of banks in creating money if anyone is interested in this related but often misunderstood concept.
Monzo Pillar 3 disclosures provide plenty of detail on the bank’s regulatory risk compliance position and should bring some comfort to those concerned about Monzo’s ability to operate. As a fun exercise, compare Monzo’s key ratios (CAR, LCR) to banks like Barclays, Lloyds and company. While not like for like, the ratios reflect the different balance sheets and models.
Link to the 2020 Pillar 3 document here:
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Interesting but if that’s the case why couldn’t they have gotten a higher price for the shares 
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It’s usually easier to extend a round than go through the admin of creating a new one. And the folks you’d need to convince to start a new round - existing investors - are also the ones that would benefit from the existing round being extended…
Feels like the right choice here. There’s certainly the expectation that they’ll get a good return at these figures.
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This seems to be the point I was awkwardly trying to stumble towards in my earlier post.
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Yes, sorry I know how a bank works I was just being a little loose with language (it’s a forum!).
Maybe I’m not clear, sorry, but what is your explanation for the BOE increasing capital requirements? It’s still a mystery to me given how much they’ve lent out but you seem to understand more?
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There was some discussion of this a few weeks ago, so maybe this will help:
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