The internet bank MeDirect, which is mainly known for high-interest savings accounts, swallowed a loss of 22 million in the corona year. This is partly the result of the construction of a sling pot.
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MeDirect Bank, an online bank covered by the Belgian savings guarantee, only announced its result for the past (corona) year this morning, and that is a bad result, as it turns out. MeDirect says it has set aside 15.5 million euros in pre-tax provisions in connection with corona to absorb future losses related to the pandemic. The sling pool was created to absorb possible losses on loans to the event sector.
It is striking that net, after tax, there is still a loss of 22 million. A year earlier, that was a profit of 1.8 million, according to the 2019 annual accounts that were filed with the balance sheet. The high loss figure is the result of higher operating costs. MeDirect changed a large part of the management. The bank also got a new CEO, Tim Rooney. He became CEO in May. New managers were appointed in positions such as balance sheet management, the legal department and marketing. ‘I have doubled the team in Belgium to 50 people,’ says Rooney. The support services are still in Malta with the mother of MeDirect.
Rooney previously worked at Bank Nagelmackers as CEO and at its Chinese shareholder Anbang. But he made his mark in Great Britain at Abbey National (Santander UK), a specialist in home loans. Later he also worked for GE and Deutsche Bank.
MeDirect points out that it remains a very highly capitalized bank with a capital ratio of 36.39 percent. This means that there is a high buffer to absorb losses. The bank is also very liquid. When the corona crisis erupted last year and there was unrest in the capital markets, the MeDirect portfolio came under pressure due to widening interest spreads. That is the difference in interest rates between the highest quality and lower quality loans. The bank largely reduced its corporate loans portfolio.
Due to the persistently low interest rates in the market, it is more difficult for the bank to make a difference with high savings rates. The bank is increasingly trying to profile itself as an asset manager who also sells investment funds and bets on share trading. From the end of this year, MeDirect will also distribute home loans in Belgium. Last year, the bank also made additional investments in the Dutch mortgage market.
The home loans in Belgium come in collaboration with a ‘large European insurer’. Rooney has not yet disclosed more details.
MeDirect Bank is chaired by Marcia De Wachter, former member of the executive committee of the National Bank.
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