Metro Bank shares jump after deal to bolster finances
By Iain Withers
LONDON (Reuters) -Shares in Metro Bank jumped in early trading on Monday, after the embattled British lender struck a fundraising deal overnight to bolster its balance sheet following urgent weekend talks in the wake of volatile trading.
Metro announced a 325-million-pound ($396-million) capital raising exercise and a 600-million-pound debt refinancing on Sunday, in a deal that would hand majority shareholder control to its biggest investor, Colombian billionaire Jaime Gilinski.
Gary Greenwood, banking analyst at Shore Capital, said the deal appeared to secure the bank's immediate future, but represented «a very painful rescue» as it entailed a hit for both shareholders and bondholders.
Metro Bank shares were up 26% at 56.9 pence by 0800 GMT.
Metro launched in 2010 to challenge the dominance of Britain's big banks but hit a string of setbacks in recent years, such as accounting errors, leadership departures and delayed regulatory approval for key capital reliefs.
The bank's stock whipsawed last week on reports that it was trying to raise about 600 million pounds, with the lender later confirming it was exploring its options.
Metro's principal regulator, the Bank of England's Prudential Regulation Authority (PRA), approached a number of major banks last week including Lloyds (LON:LLOY) and HSBC to consider takeover offers for the bank.
The PRA welcomed Metro's fundraising deal on Sunday.
As part of the deal, Metro has agreed to a capital raise comprising 150 million pounds of new equity and a 175-million-pound issuance of bail-in debt known as «MREL».
The equity raise was led by Metro's largest shareholder, Gilinski-owned Spaldy Investments, which contributed 102 million pounds. Spaldy will become the
Read more on investing.com
