The agreement comprises a capital raise of £325 million and debt refinancing totaling £600 million.
Spaldy Investments Limited, Metro Bank’s most significant shareholder, will contribute £102 million and will assume the role of the dominant shareholder of Metro Bank upon the transaction’s conclusion, holding approximately 53% of the shares.
Sustain profitable growth in the coming years
This development follows a decline in the bank’s share price last week, triggered by reports of discussions with investors regarding raising approximately £250 million in equity funding and £350 million in debt. Furthermore, the bank’s shares experienced substantial declines last month when regulatory authorities declined to approve the bank’s request to reduce the capital requirements associated with its mortgage business.
Daniel Frumkin, Metro Bank’s Chief Executive Officer, stated, “Today’s announcement represents a new era for Metro Bank, enabling us to sustain profitable growth in the coming years. Metro Bank recorded a statutory profit after tax in Q3 2023 and continues to exhibit ongoing momentum as we work towards our aspiration of becoming the UK’s leading community bank. Our robust foundation is supported by a loyal customer base and committed employees, and we will continue enhancing the Metro Bank offerings to deliver the digital and in-person banking services our customers expect. We express our gratitude to our shareholders and noteholders for their unwavering support of Metro Bank and our customers.”
Significant decrease in the bank’s stock market capitalization
Jaime Gilinski Bacal, the founder of Spaldy Investments Limited, commented, “I have been an active investor in Metro Bank since 2019. The opportunity to become the bank’s major shareholder is driven by my belief in the need for physical and digital banking underpinned by a focus on exceptional customer service. I believe that the package announced today enables the bank to pursue growth and build on the foundational work undertaken over the past three years.”
Metro Bank, established in 2010 as a challenger to established players, ranks among the top 10 banks in the UK, boasting approximately 2.7 million customers and a network of 76 branches across the country.
Over the past six months, the bank’s shares have seen a nearly two-thirds reduction in their value, resulting in a significant decrease in the bank’s stock market capitalization in recent years. Currently, the bank’s market capitalization stands at less than £100 million, a significant decline from its peak value of approximately £3.5 billion five years ago.