British domestic banking is a funny business. Well, not so funny if you are a shareholder in say, Lloyds (you are), which is paying out £17bn of your capital to purge the sins of the previous managements in the great payment protection racket. Quite funny if you managed to find a few shares in Metro Bank when it slid quietly onto the market in March.

While Lloyds reported its scars this week, Metro is romping ahead. With first-quarter results showing deposits, loans and assets up by two-thirds or more, its shares have risen from £20 to over £27, and the bank is now profitable. Some of this can be attributed to Metro’s red and blue “shops” expensively designed by the founder’s wife, set in prominent, affluent locations. Some might be attributed to its simple business model. Some of it obviously follows its dog-friendly policy. But most of its success in attracting over £7bn in deposits is because the government guarantees the first £75,000 of each customer’s money.

Up to that sum, the creditworthiness of Metro or any of the other “challenger” banks which are nipping at the heels of the lumbering giants is irrelevant. The guarantee is effectively a state-underwritten insurance policy, free to the banks. No wonder there are suddenly so many of them.

Gina, you cannot be Sirius

Gina Reinhart did not become Australia’s wealthiest woman by accident. She became it by iron ore inheritance, and now she is ploughing some of the spoils into the old country to help finance one of mining’s most bizarre ventures. There’s an awful lot of polyhalite under the North Yorkshire moors, and lots of people wanted it to stay there.

To keep them happy Sirius Minerals, which owns this world-scale lump of fertiliser, has promised a subterranean conveyor to Teeside. At 23 miles, it is two-thirds the length of the channel tunnel, and at 4.1m in diameter, only slightly narrower than its service tunnel. The bigger technical challenge is the conveyor itself, or rather, to keep it working over such a vast distance.

The biggest challenge is the value of the output. The world glut of potash, a competing fertiliser, has seen the price halve in five years and major projects shelved. Grizzled mining analyst David Hargreaves calculates that Sirius would add a minimum of 10 per cent to world production, effectively preventing any recovery. The distant price peak, when BHP made its ill-judged grab at Canada’s Potash Corporation, is four times today’s.

Sirius is years and $3bn away from production, but is still valued by the market at over £900m at today’s 40p. Ms Rinehart says she is taking the long view. Like the conveyor(s), it will be very long, with a high chance of breakdown.


The People’s Trust is pure in hue

We’ll keep it flying here for you

Daniel Godfrey was too pure for the Investment Association, and was thrown out for suggesting that its members might put the customers first. Now he is launching what he thinks an investment company should be; owned by its members, salaries partly in shares which must be retained, and no bonuses. The People’s Trust’s share portfolio should be long term, which is supposed to encourage more responsible behaviour from the underlying companies themselves.

This is a very worthy attempt to align the interests of investors and managers in an industry where they are generally not. Mr Godfrey might even describe his business as an investment trust, with its independent board to encourage good behaviour and performance from the managers.

This is harder than it looks, since firing the manager is cumbersome and expensive. Besides, once the initial enthusiasm for a new offering fades, the market tends to price investment trusts at a discount to the value of their underlying assets, which makes issuing new shares somewhat awkward.

Running a start-up investment company is expensive, even without bonuses, and Mr Godfrey estimates annual costs at up to 1.5 per cent. To help him find £100,000 to get going, the trust is crowdfunding at £20 a pop. Best of luck.

This is my FT column from Saturday