Metro Bank Shares Jump 26% after Securing $400M Capital Raise

UTC by Bhushan Akolkar · 3 min read
Metro Bank Shares Jump 26% after Securing $400M Capital Raise
Photo: Matro Bank UK / Facebook

Colombian banker and real estate developer Jaime Gilinski Bacal pumped £102 million making him the dorman stakeholder with 53% stake.

During the early trading hours on Monday, October 9, shares of Metro Bank Holdings (LON: MTRO) jumped by a staggering 26%. At press time, the MTRO stock is trading at 52.60 GBX. 

Metro Bank Shares

The sharp surge in stock price comes as Metro Bank announced a £325 million ($395.6 million) capital raise and £600 million in debt refinancing on Sunday, October 8. The capital raise encompasses £150 million in fresh equity and £175 million in “MREL” issuance, which constitutes a type of bail-in debt.

Additionally, the bank has announced a debt restructuring initiative that will lengthen the maturity of its outstanding borrowings. As part of this restructuring, investors holding the bank’s £250 million worth of tier 2 bonds set to mature in June 2028 will incur a 40% reduction in their holdings.

This agreement follows a week in which investors were rattled by reports that the bank was actively seeking a substantial financing arrangement. Over the weekend, extensive discussions took place, during which Metro Bank approached several major banks for potential contributions.

Colombian banker and real estate developer Jaime Gilinski Bacal spearheaded the capital raise. He also committed £102 million to the initiative, making him the bank’s dominant shareholder, holding a 53% stake. Speaking on the development, Bacal said:

“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 Plans for Commercial Lending

Metro Bank said that the fundraising will provide them with the opportunity to move towards specialist mortgages and commercial lending. Besides, they can also continue with growth in raising deposits and current accounts.

The bank also disclosed ongoing discussions regarding the potential sale of up to £3 billion worth of residential mortgages. Last month, regulators expressed reservations about allowing Metro Bank to employ its internal risk models for certain mortgages. This raised concerns among investors due to the resulting increase in capital requirements.

According to data from LSEG, the bank’s stock experienced significant volatility last week, ultimately closing 22.5% lower.

Established in 2010 as a challenger bank, Metro Bank currently holds a market capitalization of less than £100 million. It faced a significant setback in 2019 when a major accounting error led to the founder’s resignation and fines for its former CEO and CFO.

During the recent turbulent period, several ratings agencies and investment banks downgraded the bank’s stock. Stifel, an investment bank, suggests potential capital requirements of up to a billion over the next two years.

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