Another quote for the file,
Another quote for the file, about one of the new banks set up to challenge the oligopoly of the established ones (from yesterday's Times):
Quote:
Metro takes far more in deposits than it lends to customers. Deposits are now £5.1 billion, compared with £3.5 billion in loans, making its loan-to-deposit ratio 69 per cent at the end of 2015. The model, Metro says, is ultra-safe, but it also makes it difficult to generate profits, because banks normally make money from charging more on loans than they pay out in interest to depositors.
Metro Bank in fact made a loss in 2015 as in previous years. They seem to be using deposits to expand their business (more branches) than for loans to others. A sensible start-up business strategy maybe, but not something that could properly be described as "ultra-safe". In any event, they are not creating anything out of thin air.