Metro Bank looking to raise up to £600m in new financing

The Metro Bank is in the process of raising up to £600m, following a nearly 50 per cent fall in its share price over the past few weeks, it was reported.

The bank is in talks with investors about raising £250m in equity financing and £350m in debt, the Financial Times first reported on Wednesday.

Metro Bank said: “As previously stated, Metro Bank continues to consider how best to optimise its capital resources to allow it to take advantage of the deposit and asset origination platform that has been built.”

A source was quoted as saying in the FT report that Metro has enlisted Morgan Stanley to offer strategic guidance and oversee any potential capital-raising efforts.

Rating agency Fitch placed Metro on negative watch earlier on Wednesday, highlighting heightened risks to the company’s business model, capital position, and funding.

This comes as Metro’s market capitalisation stood at approximately £85m at the close of Wednesday’s trading, following a staggering 98 per cent decline over the past five years.

Sky News reported that Royal Bank of Canada, Metro Bank’s corporate broker, is also involved in the equity-raise.

With 2.7 million customer accounts under its belt, Metro Bank ranks among the top 10 largest banks in the United Kingdom.

Last month, the bank’s shares fell following indications from the Bank of England’s Prudential Regulation Authority (PRA), its primary regulator, that it was unlikely to grant the lender permission to employ its internal risk models for certain mortgages.

In September, Metro said: “The board retains conviction in the merits of Metro Bank’s customer-centric model and strongly believes that there is a significant opportunity set that the company can capitalise on, subject to renewed balance sheet strength.”

Reuters reported that Metro Bank was valued at £87m after the close on Wednesday. Shares have lost about two-thirds of their value since mid-February, it said.