Shares in Metro Bank have plunged by more than a quarter after reports that the lender is in talks with investors to raise up to £600m to bolster its balance sheet.
The lender is looking to raise around £250m in equity funding and £350m in debt, ahead of £350m of loan notes that fall due next October, according to the Financial Times.
The newspaper adds that regulators, the Prudential Regulation Authority and Financial Conduct Authority, have asked to see Metro’s chief executive Daniel Frumkin and chair Robert Sharpe this afternoon to discuss its financial position.
Shares in the lender tumbled as much as 27% in morning trading, and are 23% lower at 38.6p in the early afternoon market, valuing the business at £76.6m.
The bank’s stock has crashed by almost 50% in recent weeks. At its 2018 peak, the business was worth £3.5bn.
Metro says in a statement to the market, “the company continues to consider how best to enhance its capital resources, with particular regard to the £350m senior non-preferred notes due in October 2025.
It adds: “The company is evaluating the merits of a range of options, including a combination of equity issuance, debt issuance and/or refinancing and asset sales.
“No decision has been made on whether to proceed with any of these options.”
The bank says it has made an underlying profit for the last three consecutive quarters up to the end of June, and “expects [its upcoming] third quarter trading update to show continued momentum in personal and business current account growth and customer acquisition, in line with expectations.
“Metro Bank continues to be well positioned for future growth.”
The lender, which has around 2.7 million customers, was founded in 2010 and was the first high-street bank launch in more than 100 years.
However, in 2019 it suffered a £900m accounting scandal, when it emerged that the risk attached to some of its loans had been underestimated. The bank and some of its senior officers were fined £10m for misleading investors.
On Wednesday, ratings agency Fitch placed the bank on negative watch, citing concerns over its capital strength and funding, as well as its business model.
