High street challenger Metro Bank has successfully fortified its balance sheet by raising nearly £925 million amidst a share price plunge. This significant financial boost includes new funding, refinanced debt, and a substantial contribution from Spaldy Investments. The move comes as the bank plans to sell up to £3 billion of residential mortgages, shifting its focus towards alternative mortgage solutions and commercial lending.
The £925 million funding strategy is designed to strengthen the bank's balance sheet and increase earnings potential for sustained profitable growth. The plan comprises £325 million in new capital, including £150 million from new investors and £175 million MREL issuance, along with £600 million allocated for debt refinancing.
Spaldy Investments, led by Colombian billionaire Jaime Gilinski Bacal, played a crucial role in the equity raise, contributing £102 million. This deal increases Gilinski Bacal’s stake from nine to 53%, making him the majority shareholder and reinforcing his belief in exceptional customer service as key to banking success.
CEO Daniel Frumkin views this as a pivotal moment for Metro Bank, building on foundational work over the past three years to ensure profitability. He aims to make Metro Bank the UK’s leading community bank offering both digital and physical banking services to its loyal customer base of 2.7 million customers.
The Prudential (LON:PRU) Regulation Authority (PRA) supervised the negotiations and commended Metro Bank for strengthening its capital. Despite the turmoil surrounding alleged branch closures and account closures of British Muslims, Metro Bank has rejected takeover advances from Shawbrook and JP Morgan Chase (NYSE:JPM). However, NatWest, Lloyds (LON:LLOY), and Santander (BME:SAN) have shown interest in parts of Metro Bank.
As part of its future strategy, Metro Bank plans to implement a £30 million (GBP1 = USD1.2224) annual cost-cutting plan starting from 2025. Despite these changes, the bank remains committed to maintaining cash accessibility for its customers.
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