Reports have emerged that Metro Bank requires millions to reinforce its finances, leading to a 27% fall in its shares in early trading. The bank has not commented on the figure or the urgency of the talks but stated it “continues to consider how best to enhance its capital resources”. The bank began operations in 2010 and presented itself as a “challenger” to mainstream high street banks by being open seven days a week. It currently has around 2.7 million customers.
Last month, following the regulatory refusal to approve a request to lower the capital requirements attached to its mortgage business, Metro Bank suffered a significant fall in shares. Options the bank is considering include a share sale of £100m, borrowing up to £350m, looking at the potential sale of assets, and seeing advice from Morgan Stanley on equity sales with hopes of raising millions. Before October 2025, the bank will need to refinance £350m worth of debt.
On Thursday, Metro Bank clarified that no decisions had been made and confirmed compliance with minimum cash requirements. However, there are concerns that the bank will find it tough to raise the required funds in the future. In H1 2019, a risk estimation error related to some of its loans came to light, resulting in the bank’s first half-year profit this year. Current CEO Daniel Frumkin suggested that 2023 would be a “transitional year” for the bank.
Rating agency Fitch has placed negative watch on Metro Bank, citing worries over its capital strength and funding along with its business model. At its peak five years ago, the bank was valued at around £3.5bn, but its stock market value now stands under £100m
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