Metro Bank shares pop 25% after securing new capital

Metro Bank Holdings PLC (LON: MTRO) has secured £325 million ($395.6 million) in fresh capital. Its shares are up roughly 20% at writing.

Metro Bank also announced debt refinancing today

On Monday, the embattled bank announced £600 million in debt refinancing as well.

The capital raise, as per the press release today, includes £175 million in bail-in debt or “MREL” on top of £150 million worth of new equity.

Jaime Gilinski Bacal – a Colombian real estate developer led the capital raise, contributing £102 million through Spaldy Investments Limited. He’s now a controlling shareholder with a 53% stake in Metro Bank.

He’s convinced the capital raise will help the financial services institution to continue its pursuit of growth. Metro Bank shares are still down more than 60% versus their year-to-date high.

Mark my words, #MetroBank is the first domino to fall, shortly after the attention will move onto #Revolut that, as far as I am concerned, has been running a scheme very similar to Wirecard one

They aren’t listed but plenty of lenders do have exposure to them… pic.twitter.com/sTVGG3szB6

— JustDario 🏊‍♂️ (@DarioCpx) October 7, 2023

John Cronin reacts to the development on Monday

Metro Bank expects the capital raise to help it shift focus to commercial lending and specialist mortgages. Still, the Head of Financial Research at Goodbody – John Cronin said today:

Not the best possible outcome for shareholders and bondholder by any stretch but it does secure Metro Bank’s longevity as an independent institution and no on loses everything.

Note that Metro Bank did also announce plans of restructuring debt this morning. That would see owners of its tier 2 bonds (due in mid-2028) take a “deep haircut” of 40%.  

The London-listed firm reiterated on Monday that discussions related to unloading residential mortgages worth up to £3.0 billion are ongoing. Wall Steet currently has a consensus “underweight” rating on Metro Bank shares.