Metro Bank secures new cash injection following urgent talks with investors

By Louis Goss

Metro Bank has struck a deal to secure GBP925 million ($1.13 billion) worth of new financing following a weekend of urgent talks amid concerns about the financier's balance sheet.

The London-listed bank said it had secured GBP325 million through a capital raise and a further GBP600 million through debt refinancing.

The new deal will see Metro Bank's biggest shareholder, Colombian billionaire Jaime Gilinski Bacal, take control of the company, by injecting an extra GBP102 million, that will see him take a 53% controlling stake through his British Virgin Islands-based firm Spaldy Investments.

Shares in the bank (UK:MTRO) jumped more than 17% on news of the new investment after having lost 47% of their value over the past month.

Metro Bank became the first new high street bank to launch in the U.K. in more than 100 years when it opened in 2010, before it underwent almost a decade of fast-paced expansion.

The bank, which prides itself on its customer service, now has 76 stores across the UK, controls GBP22.1 billion worth of assets, and serves 2.7 million customers, according to its most recent annual report.

Metro Bank's share price has, however, suffered in recent years following dramatic revelations in 2019 it had misclassified GBP900 million worth of loans due to an accounting error

The scandal eventually saw the firm fined combined sums of more than GBP15 million by the Bank of England and the UK's Financial Conduct Authority.

More recently, shares in Metro Bank later started sliding again last month after the company said U.K. regulators were unlikely to approve plans that would let it generate higher returns from its mortgage business.

Concerns about Metro Bank's future were further heightened again last week following reports from Sky News the U.K. challenger bank was seeking to raise hundreds of millions to bolster its finances.

The Bank of England's Prudential Regulation Authority financial watchdog later called on Metro Bank to present a plan to shore up its balance sheet or instead seek out a buyer.

The Bank of England also contacted lenders itself to gauge interest in a possible sale, the Financial Times reported.

Metro Bank CEO Daniel Frumkin said the new funding marks a "new chapter for Metro Bank, facilitating the delivery of continued profitable growth over the coming years."

-Louis Goss

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10-09-23 0715ET

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