Metro Bank reaches a financing agreement with investors and saves the ‘match point’

2023-10-09 08:21:40

Updated Monday, October 9, 2023 – 08:21

Several entities, including the British subsidiary of Banco Santander, have been considered as possible buyers of the British bank.

Metro Bank office in the United KingdomDANIEL LEAL

It has been a hectic weekend for the British bank Metro Bank, whose financial situation caused its stock market to collapse last week and has placed it in an extreme situation. Conversations about a possible purchase by another entity have taken place in recent days and, according to Bloomberg, the British subsidiary of Banco Santander has been part of them, but late on Sunday, a financing agreement with investors has allowed for the entity to save the match point and end up in the hands of another giant, as reported by Reuters.

The package agreed with investors includes a capital increase of £325m, split between £150m of new equity from Metro’s largest shareholders and £175m of new debt from bondholders. Metro’s largest shareholder, the Colombian billionaire Jaime Gilinski Bacalcontribute 102 million of the new capital, details the Financial Times.

Metro Bank’s financing package also includes £600 million of debt refinancing, which will mean that holders of the riskier Tier 2 bonds will be subject to a 40 to 45% cut in their investments. In a statement reported by the FT, Metro Bank CEO Dan Frumkin said that the package “marks a new chapter” for the entity.

Thus ends a few intense days for the bank in which its managers have even been analyzing the interest of several entities to take over the company. Among them has been Santander UK, the British subsidiary of Banco Santander, although when asked by this newspaper, the group chaired by Ana Botón did not want to comment. Other entities such as NatWest, HSBC y Lloyds They have also shown their interest, according to the Sky News network, as well as JP Morgan, which finally ended up withdrawing from the talks.

The information about a possible purchase managed to stop the stock market bleeding that caused a 25.7% collapse in Metro Bank shares last Thursday. Doubts about a possible capital increase unleashed rejection from investors, who have also been distrusting the entity for years. In 2019, a scandal over its accounting was the source of misgivings, although this time the problem is in its mortgage business and capital situation.

The entity requested permission from the Bank of England to release more capital reserves but the Prudential Regulation Authority (PRA) rejected it, something that was definitive for the crisis of recent weeks.