The challenger bank has secured £325m capital raise, comprising £150m of new equity and £175m of new minimum requirement for own funds and eligible liabilities (MREL) issuance.
It has also obtained £600m of debt refinancing.
In a statement to the London Stock Exchange, the bank said the injection would enhance the strength of its balance sheet and boost its earnings potential.
The equity raise was led by Metro Bank’s largest shareholder, Spaldy Investments, which contributed £120m. After completion, Spaldy Investments will become the controlling shareholder of Metro Bank with a 53 per cent stake.
Metro Bank said the capital would enable it to “grow assets significantly over the coming years” alongside a shift towards specialist mortgages and commercial lending.
Metro Bank also confirmed it was holding discussions to sell up to £3bn of its residential mortgage book. It said this would reduce its risk weights assets by around £1bn and potentially improve its profitability.
A positive Q3
It reported “positive trading” in Q3 and said it made a statutory profit after tax while continuing to grow its accounts and customer base.
Daniel Frumkin, chief executive at Metro Bank, said: “Today’s announcement marks a new chapter for Metro Bank, facilitating the delivery of continued profitable growth over the coming years. Metro Bank made a statutory profit after tax in Q3 2023, and continues to demonstrate ongoing momentum as we strive towards our ambition to be the UK’s number one community bank.
“Our strong franchise is underpinned by our loyal customer base and engaged colleagues and we will continue to develop the Metro Bank offer to provide the digital and physical banking services our customers expect. We thank our shareholders and noteholders for their continuing support of Metro Bank and our customers.”
Jaime Gilinski Bacal, founder of Spaldy Investments Limited, said: “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.”
The bank’s capital position has been thrown into question after it was found miscalculating the risk of its mortgage book in 2019 and its application to use advanced internal rating-based (AIRB) for residential mortgages was delayed.
