Metro Bank share prices rises after bank strikes late-night deal to shore up balance sheet
Metro Bank confirmed this morning that it had secured a major refinancing package from its investors after a bruising week in which the bank’s share price fell nearly 30 per cent.
The deal came at the end of a dramatic weekend in which regulators had teed up other lenders to look at buying parts of the bank.
The refinancing includes a £325m capital raise, led by existing shareholder Spaldy Investments, alongside £600m of debt refinancing in which holders of the bank’s tier 2 will see a 40 to 45 per cent haircut.
Spaldy Investments — led by Colombian billionaire Jaime Gilinski Bacal — will become the controlling shareholder with a stake of around 53 per cent.
The shares will be issued at a price of 30p per share, lower than its closing price of over 45p with Metro Bank confirming existing shareholders will “experience material dilution”. Boss Daniel Frumkin will subscribe up to £2m in the equity raise.
The capital raise will shore up the bank’s capital and extend the maturity of its debt profile significantly. Regulators had been concerned by a wall of debt maturing next year.
The capital raise is expected to help deliver a return on tangible equity of over nine per cent in 2025 and low double-digits thereafter.
Shares in the bank were up nearly 13 per cent early on Monday morning.
Metro Bank is also in discussions to sell up to £3bn worth of residential mortgages, which will reduce its risk weighted assets and increase its capital levels.
Chief executive Frumkin said: “Today’s announcement marks a new chapter for Metro Bank, facilitating the delivery of continued profitable growth over the coming years.”
“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,” he continued.
Gilinski, founder of Spaldy Investments, said: “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.”
The news comes after Metro Bank’s share price plummeted on reports that it had hired investment bankers to explore ways to raise some £600m to help bolster its balance sheet.
The bank’s shares fell nearly 30 per cent over the course of the week, rebounding slightly after it was reported to be sitting on an offer from existing investors.
According to reports, regulators canvassed a range of lenders to table a bid for Metro Bank.