Metro Bank announces new deal with investors to shore up finances

Metro Bank has announced a new deal with investors to shore up its finances.

The deal includes a £325 million capital raise and £600 million in debt refinancing.

Spaldy Investments Limited, Metro Bank’s largest shareholder, is contributing £102 million and will become the controlling shareholder of Metro Bank upon completion of the transaction – with roughly a 53% shareholding.

It comes after the bank’s shares tumbled last week on reports it was in talks with investors to raise around £250 million in equity funding and £350 million in debt.

Its shares also suffered hefty falls last month after regulators refused to approve a request from the bank to lower the capital requirements attached to its mortgage business.

Daniel Frumkin, chief executive officer at Metro Bank, said: “Today’s announcement marks a new chapter for Metro Bank, facilitating the delivery of continued profitable growth over the coming years.

“Metro Bank made a statutory profit after tax in Q3 2023, and continues to demonstrate ongoing momentum as we strive towards our ambition to be the UK’s number one community bank.

“Our strong franchise is underpinned by our loyal customer base and engaged colleagues and we will continue to develop the Metro Bank offer to provide the digital and physical banking services our customers expect.

“We thank our shareholders and noteholders for their continuing support of Metro Bank and our customers.”

Jaime Gilinski Bacal, founder of Spaldy Investments Limited, said: “I have been an active investor in Metro Bank since 2019. The opportunity to become the bank’s major shareholder is driven by my belief in the need for physical and digital banking underpinned by a focus on exceptional customer service.

“I believe that the package announced today enables the bank to pursue growth and build on the foundational work undertaken over the past three years.”

Metro Bank is one of the UK’s top 10 banks, with around 2.7 million customers and 76 branches across the UK, having launched its first branches in 2010 as a challenger to the established players.

Shares in the bank have lost nearly two thirds of their value over the past six months, with its stock market value much reduced in recent years.

It now has a market capitalisation of less than £100 million, having been valued at around £3.5 billion at its peak five years ago.

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