Metro Bank’s Share Price Surged 27.9% on New Capital Package

The Metro Bank Holdings PLC (LON: MTRO) share price surged 27.9% after announcing that it had completed a successful capital package. The company had raised capital worth £325 million and a further £600 million in Debt Refinancing.

The £325 million capital raise comprised new equity worth £150 million and £175 million of new MREL (minimum requirement for own funds and eligible liabilities) issuance. The £600 million Debt Refinancing also helped boost its balance sheet strength and fast-track its earnings potential. 

The capital package significantly strengthens Metro Bank’s Common Equity Tier 1 (CET1) and removes the bank from the capital requirements directive (CRD) IV combined buffer. The package is expected to support Metro Bank’s delivery of a return on tangible equity (RoTE) of over 9% in 2015 and low double-digits to mid-teens over the medium term. 

The bank delivered a pro forma 30th June 2023 CET1 ratio of over 13% and an MREL ratio of over 21.5%. The capital package allows the bank to grow its assets significantly over the next few years. The bank intends to shift its asset base slowly towards specialist mortgages and commercial lending to optimise risk-adjusted returns. 

Metro Bank also intends to support the continued success it has experienced in raising deposits and fueling current account growth. The equity raise was spearheaded by Metro Bank’s largest shareholder, Spaldy Investments Limited, which acquired shares worth £102 million. 

Spaldy Investments will become Metro Bank’s controlling shareholder once the transaction is completed. Spaldy will own 53% of Metro Bank’s outstanding shares.  

Daniel Frumkin, Metro Bank’s CEO, 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.”

The Metro Bank (MTRO) share price. 

The Metro Bank share price surged 27.94% to trade at 55.4p, rising from Friday’s closing price of 43.3p.