Metro Bank, one of the top 10 lenders in the UK, is seeking to raise £600 million ($821 million) as it grapples with a financial crisis that has seen its share price fall nearly 50%. The bank's market cap is currently under £100 million, a stark contrast from its peak valuation of £3.5 billion six months ago.
The bank's shares initially dropped by a third before stabilizing 23% lower, and it now needs to refinance £350 million debt soon. To bolster its balance sheet, the bank is in talks to secure £250 million in equity and £350 million in debt, with strategic advice from Morgan Stanley (NYSE:MS), Moelis (NYSE:MC), and the Royal Bank of Canada.
The financial turmoil comes after regulators rejected Metro Bank's request to lower capital requirements for its mortgage business. Despite these challenges, Metro Bank stated it continues optimizing capital resources for the deposit and asset origination platform it developed.
This comes amidst the bank serving 2.7 million customers, but it hasn't finalized its strategy despite being under negative watch by Fitch. The bank's predicament has been exacerbated by regulatory refusal to ease capital requirements for its mortgage business.
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