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HomeNews WireMetro Bank Shares Suspended Twice as Volatile Session Sees 29% Drop

Metro Bank Shares Suspended Twice as Volatile Session Sees 29% Drop

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Metro Bank, a UK-based challenger bank, experienced a volatile trading session on Thursday, resulting in two temporary suspensions of its shares. The stock dropped by over 29% from the previous day’s close before slightly recovering after trading resumed.

The London Stock Exchange confirmed that the suspensions were triggered by the exchange’s circuit breaker mechanisms, which are in place to prevent extreme volatility. The bank’s decline came following reports that it was attempting to raise £600 million ($727 million) in debt and equity.

Metro Bank, founded in 2010, currently has a market capitalization of less than £100 million. The bank stated that it is exploring options to enhance its capital resources, with a specific focus on a £350 million bond set to mature in 2025.

Investors exchanged over 1.6 million shares immediately after the market opened on Thursday, a significantly higher volume compared to the typical trading activity of less than 100,000 shares per hour.

This decline in Metro Bank’s stock price comes after it has already lost around two-thirds of its value since mid-February. The bank was valued at £87 million at the close of trading on Wednesday.

The Bank of England’s main regulator, the Prudential Regulation Authority, recently indicated that it is unlikely to allow Metro Bank to use its own internal risk models for certain mortgages. As a result, the bank would be subject to higher capital requirements, which has raised concerns for investors.

Investment bank Keefe, Bruyette & Woods noted that Metro Bank has been operating below the minimum requirement for own funds and eligible liabilities enforced by regulatory authorities. The bank’s ability to raise capital and address these concerns will be the key focus going forward.

Metro Bank’s struggles highlight the challenges faced by challenger banks in the UK as they navigate the competitive market and regulatory requirements. The bank will need to take decisive action to restore investor confidence and strengthen its capital position.

More detail via CNBC here… ( Image via CNBC )

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