Monzo/Starling Banking/Revolut

Dirk Diggler said:
Like I say, gut feel. It feels like there's a 2008-esque financial crash looming and these banks have no real depth to draw on.

I'm no expert, it's just pure spidey sense.
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What are they exposed to exactly? It's not like they're laden down with dodgy debt. They're more service providers than traditional high street banks, starling don't offer loans or mortgages, and seem very reluctant to even allow overdrafts
 
mid_gen said:
What are they exposed to exactly? It's not like they're laden down with dodgy debt. They're more service providers than traditional high street banks, starling don't offer loans or mortgages, and seem very reluctant to even allow overdrafts
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Well Revolut aren't a bank for a start, they likely won't be concerned given their massive expansion into all things money and recent investments.

Starling - They make a lot of money on interchange, less spending = less revenue? That could be their concern. Not certain how much the marketplace really adds to their revenue stream

Monzo do lend money, so they have other revenues + interchange, but again overall retail exposure on less spending might be a concern
 
LiE said:
Their annual reports state they are 'a going concern', so not exactly great.


Will be interesting to see the 2022 report.
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That's standard and something you'll see on the financial statements of even the most profitable and cash rich companies out there. The issue would be if it said they weren't a going concern!

The concept of going concern​

An entity prepares financial statements on a going concern basis when, under the going concern assumption, the entity is viewed as continuing in business for the foreseeable future. The term ‘foreseeable future’ is not defined within ISA 570, but IAS 1®, Presentation of Financial Statements deems the foreseeable future to be a period of at least 12 months from the end of the reporting period.

The concept of going concern is an underlying assumption in the preparation of financial statements, hence it is assumed that the entity has neither the intention, nor the need, to liquidate or curtail materially the scale of its operations. If management conclude that the entity has no alternative but to liquidate or curtail materially the scale of its operations, the going concern basis cannot be used and the financial statements must be prepared on a different basis (such as the ‘break-up’ basis).
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Martynt74 said:
That's standard and something you'll see on the financial statements of even the most profitable and cash rich companies out there. The issue would be if it said they weren't a going concern!
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Yea I think I've misused that term, but in this context from the report it makes more sense with what you said:

The risk our plans don’t deliver the expected financial and non-financial benefits to our stakeholders, could also lead to a loss of confidence, reputational damage or difficulty fundraising. So as mentioned in Note 1 of the financial statements, the Directors recognise this risk casts a material uncertainty over our ability to continue as a going concern.
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LiE said:
Yea I think I've misused that term, but in this context from the report it makes more sense with what you said:
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This is completely normal. Go and download any annual report from any company, they will have a section listing all the potential risks to the company.

e.g. one of the many risk entries in BP's last annual report -

We face challenges in developing major projects, particularly in geographically and technically challenging areas. Poor investment choice, efficiency or delivery, or operation challenges at any major project that underpins production or production growth, could adversely affect our financial performance.
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Monzo may be a turd ( I don't know), but known risks in the annual report isn't a warning sign they are going down the toilet....merely that it is an identified potential risk.
 
mid_gen said:
This is completely normal. Go and download any annual report from any company, they will have a section listing all the potential risks to the company.

e.g. one of the many risk entries in BP's last annual report -



Monzo may be a turd ( I don't know), but known risks in the annual report isn't a warning sign they are going down the toilet....merely that it is an identified potential risk.
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Not sure how often "obtaining funding" to maintain operations is a material risk tbh.
 
Martynt74 said:
That's standard and something you'll see on the financial statements of even the most profitable and cash rich companies out there. The issue would be if it said they weren't a going concern!
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LiE misquoted the report. It was that E&Y feared for Monzo as a going concern, as in, unless it does something soon to raise cash and stem loss it will be going out of business

Anyway, we know Monzo isn't really going anywhere. It's not an issue given the number of organisations would be lining up to gain 4m+ UK banking customers.
 
englishpremier said:
LiE misquoted the report. It was that E&Y feared for Monzo as a going concern, as in, unless it does something soon to raise cash and stem loss it will be going out of business

Anyway, we know Monzo isn't really going anywhere. It's not an issue given the number of organisations would be lining up to gain 4m+ UK banking customers.
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Is there a graceful exit process for failed banks (like home utility providers)?
 
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