Metro Bank has announced a new deal with investors which the lender says will secure its future. Reports had suggested that Metro Bank needed to raise cash to shore up its balance sheet, resulting in last week’s plummeting share prices. In an official statement, the bank confirmed that it had raised £325m in new funding and refinanced £600m of debt. Metro Bank CEO, Daniel Frumkin commented that the new deal marked “a new chapter” for the company.
Founded in 2010, Metro Bank became the first to open in the UK in over a century. It positioned itself as a ‘challenger’ bank to the traditional high street names, operating seven days a week in a new approach to banking. Despite its shake-up of the banking sector, concerns surrounding Metro Bank’s finances arose over the weekend, causing worry amongst investors and consumers alike. The recent agreement provides reassurance that the bank will remain fully functional moving forwards.
Metro Bank now holds £15bn worth of deposits in 76 branches and numbers 2.7 million customers. The Financial Times have also reported that several competitors are assessing possible bids for part of the Metro Bank business. However, following Sunday’s late announcement, it is confirmed that £102m of the £325m capital raise will be contributed by Spaldy Investments, Metro Bank’s biggest shareholder, owned by Colombian billionaire investor Jamie Gilinski Bacal. This transaction now sees Spaldy as the majority stakeholder of the company, contributing to securing its longevity.
The challenges have not been restricted to recent events, with the accounting scandal of 2019 leading to several high-ranking employees departing the institution. Recent months have seen a further obstacle with the bank’s request to use its own ratings system being denied by regulators in September. Metro Bank’s current focus is the ongoing discussions surrounding the potential of selling up to £3bn of its residential mortgages.
The news of the deal was welcomed by the Bank of England, which had been closely monitoring the bank due to the recent issues. Frumkin spoke positively, sharing his belief that the deal will enable the continuation of expansion and improvement in the coming years. Despite the recent turbulence, it appears that the future is looking positive for Metro Bank.
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