Shares of Metro Bank, one of the UK’s leading lenders, experienced a sharp increase on Monday morning following an announcement that the bank had secured a £325 million capital raise and £600 million in debt refinancing. This news comes after reports last week that the bank was seeking a substantial financing package, causing concern among investors. The deal, which includes a combination of new equity and bail-in debt known as “MREL” issuance, will also involve a debt restructuring to extend the maturity of the bank’s borrowings. As part of this restructuring, holders of the bank’s tier 2 bonds, due in June 2028, will face a 40% reduction in the value of their investments.
At 9:10 a.m. London time, Metro Bank shares were up by 26%, reflecting the positive response to the announcement. The bank’s decision to engage in discussions with various large banks over the weekend indicates the urgency with which it sought potential offers to meet its financing needs.
Notably, the capital raise was led by Jaime Gilinski Bacal, a Colombian banker and real estate developer who is also an existing shareholder through Spaldy Investments Limited. Gilinski Bacal contributed £102 million to the initiative, which now makes him the bank’s controlling shareholder with a 53% stake.
In a statement, Gilinski Bacal expressed his belief in the importance of physical and digital banking that prioritizes exceptional customer service. He sees this capital raise as an opportunity for the bank to pursue growth and build upon the progress made over the past three years.
Metro Bank’s successful fundraising efforts and debt refinancing have garnered attention due to the bank’s recent challenges. In 2019, the bank faced significant setbacks, including a major accounting error that led to a drop in its share price and the departure of its founder and chairman. The new capital injection and debt restructuring aim to strengthen the bank’s financial position and ensure its ability to continue its operations moving forward.
The outcome of these developments will be of interest to investors and customers alike. Metro Bank’s ability to secure financing and address its debt obligations will be crucial in reestablishing trust and confidence in the institution. With its focus on customer service and a strong capital base, the bank aims to regain stability and pursue growth opportunities in the ever-evolving banking sector.
More detail via CNBC here… ( Image via CNBC )