Metro Bank shares surge after £375m emergency capital raise following loans blunder
Shares in Metro Bank soared this morning after it successfully raised £375m of extra capital as investors backed the challenger bank following a major loans blunder.
Read more: Metro Bank raises £375m of capital hours after launching share placing
The embattled bank raised more than its target amount of £350m just hours after launching a discounted funding round last night.
The Bank of England welcomed the capital raise and said Metro Bank was "profitable and continues to have adequate capital and liquidity to serve its current customer base.”
Metro placed shares at 500p, a discount on yesterday’s closing price of 536.5p.
Shares have climbed more than 23 per cent in early trading to 662p following the vote of confidence from investors.
Despite the surge, the bank’s stock is still down 72 per cent since it admitted in January that a swathe of commercial loans had been wrongly classified and should have been among its “risk-weighted assets.”
The bank issued the emergency cash call in response to the error, which has sparked two regulatory probes, in order to boost the capital it held to cover the loans.
Chairman Vernon Hill said: "I am really pleased with the support we have received from both existing and new shareholders, and for their confidence and belief in Metro Bank's strategy.
"The placing was significantly oversubscribed and as a consequence we raised a total of £375m.
He added: "Although we have faced challenges in the past few months, we remain fully focused on providing the outstanding service and convenience that our customers expect of us."
Earlier this week the nine-year-old lender was forced to quash rumours of fresh financial trouble after warnings spread on social media.
Read more: Metro Bank shares rebound from all-time lows after Whatsapp rumours quashed
Customers rushed to branches in west London to withdraw cash and safe deposit boxes before Metro branded the rumours “false.”
Pressure has mounted on the board in recent weeks ahead of the bank's AGM on Tuesday.
Pirc became the latest shareholder advisory group to urge investors to block the re-election of chairman Vernon Hill earlier this week.
The firm shared the concerns of Glass Lewis over payments made by the bank to Hill’s wife’s architecture firm Interarch, which has for the design of its branches.
Another proxy adviser ISS urged shareholders to abstain on re-electing Hill and chief executive Craig Donaldson.
ISS said accountability for the loans error sat with the pair, as well as directors Steve Bernau and Gene Lockhart, but noted that regulatory probes were still ongoing.