Metro Bank bolsters financial standing with £325m capital raise and £600m debt refinancing

Metro Bank, a leading community-focused financial institution, has successfully secured a robust £325m capital package, inclusive of an Equity Raise and a £600m Debt Refinancing deal. This strategic move fortifies the bank’s financial foundation and paves the way for continued expansion and lucrative earnings growth.

Key Highlights

• Metro Bank’s Capital Package comprises a £150m new equity infusion and a £175m new MREL issuance, further supplemented with a £600m debt refinancing plan.
• The CET1 capital boost will elevate Metro Bank’s ratio beyond 13% by June 2023, ensuring financial stability and conformance to regulatory requirements.
• Separate discussions revolve around the potential asset sale of up to £3bn in residential mortgages, echoing a similar successful transaction in December 2020. This deal is anticipated to be beneficial for Metro Bank’s CET1 and MREL ratios.
• With the imminent equity raise, Spaldy Investments Limited, an early supporter since 2019, is set to become Metro Bank’s largest shareholder, underlining their faith in the bank’s vision and growth strategy.
• Metro Bank’s strategic roadmap underscores a focus on specialist mortgages, commercial lending, and optimizing risk-adjusted returns, backed by the consistent success in deposit accumulation and current account expansion.

The Equity Raise, involving several existing shareholders and new investors, is to culminate in Q4 2023. Of notable mention is Spaldy Investments Limited’s major role, contributing £102m and thereby acquiring a controlling stake of approximately 53% in Metro Bank.

Furthermore, Metro Bank’s Debt Refinancing initiative has garnered comprehensive support from noteholders. This initiative involves a 40% haircut on the Tier 2 Instrument, potentially adding up to £100m to Metro Bank’s CET1 capital.

Simultaneously, Metro Bank is in advanced discussions regarding a substantial asset sale, targeting residential mortgages worth up to £3bn. The outcomes of these dialogues will likely lead to Metro Bank reinvesting the proceeds into cash, promising higher yields.

Daniel Frumkin, CEO of Metro Bank, commented on the positive trajectory, “Today’s announcement marks a pivotal moment for Metro Bank, heralding sustained profitable growth in the forthcoming years. Metro Bank’s Q3 2023 results registered a statutory profit after tax, signifying our unwavering momentum in becoming the UK’s leading community bank.”

Jaime Gilinski Bacal, founder of Spaldy Investments Limited, reiterated his strong belief in Metro Bank’s holistic banking approach, emphasizing the blend of physical and digital banking supplemented by unparalleled customer service.

Metro Bank’s strategic capital package and its prospects of an expansive asset sale highlight its commitment to ensuring long-term stability, optimizing growth opportunities, and maintaining its reputation as a trusted community bank. The collective efforts underline the bank’s ambition to adapt and evolve in the dynamic banking landscape, all while prioritizing customer needs and aspirations.