I posted this last year. I have just amended it slightly for this year.
Is Monzo going to go bust?
No. Last year they had a balance of £175 million in capital so they could lose the same amount this year (which they did give or take) and not go bust. They raised £202 million this year so that money should tie them over for a least two-ish more years. The aim is to raise more money and try to balance the books in 2022 so I cant see Monzo going out of business any time soon.If Monzo went bust what would happen?
No UK retail consumer bank has gone completely bust for a very long time. Every UK consumer retail bank in the 2008 crash was either bought or bailed out. For example: Halifax still exists as part of Lloyds (and Lloyds bailed out), Northern Rock are part of Virgin or held by the UK Government’s ‘UK Asset Resolution’, Nationwide took in a lot of failing Building Societies, RBS is about majority owned by the taxpayer etc. In 2013 the Co-op Bank was capitalised by its hedge fund bond holders, etc., etc.But what if it did happen?
The most recent example of a UK consumer retail bank going the wrong way was Co-op Bank in 2017. In that case it was going to actually run out of money that financial year (unlike Monzo’s position). When that occured the Bank of England were well aware of its capitalisation problems, it parachuted in advisors to support the Co-op Bank who were informed to either recapitalise through its shareholders or to sell itself, otherwise the Bank of England would ‘ orderly wind down the business ’. Co-op Bank failed to sell and was recapitalised.The point I am trying to make is that the Bank of England is much more aware of banks going under in 2021 then they were in 2008. No one can say if the account would stay around or whether you could access money but based on the Co-op Bank situation Monzo would either recapitalise, be sold or orderly wound down and during that wind down you would remove your balance.
A Wirecard accountancy shambles (which cannot be predicted as well) could instantly lose access to accounts but in Monzo’s case of a liquidity crisis can be seen a mile away these days and steps put in well before it happens or to safely wind it down.