09 October 2023 , 08:08
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Metro Bank has announced a new deal with investors to shore up its finances after lengthy negotiations this weekend.
The bank announced late on Sunday that it had secured £325million in new funding and had refinanced £600million of debt.
Spaldy Investments Limited, Metro Bank's largest shareholder, is contributing £102million and will become the controlling shareholder of Metro Bank upon completion with the firm's owner, Colombian billionaire Jaime Gilinski Bacal, owning roughly 53%.
It comes after the bank's shares tumbled last week on reports it was in talks with investors to raise around £250million in equity funding and £350million in debt. Its shares also suffered hefty falls last month after regulators refused to approve a request from the bank to lower the requirements attached to its mortgage business.
Metro Bank's chief executive Daniel Frumkin said the deal marked a "new chapter" which would allow it to expand become more profitable in the future.
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He said: "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."
Metro Bank was founded in 2010 in the wake of the financial crisis and is now one of the UK's top 10 banks with nearly three million customers and 76 branches across the UK. It offers current and business accounts, personal loans and insurance products and employs about 4,000 people. Metro Bank also currently holds around £15billion worth of mortgage deposits.
Last week, the bank said it was in discussions about raising cash by selling up to £3billion of its residential mortgages. These discussions are to still continue.
Homeowners with mortgages from Metro Bank do not face any immediate change, but if a deal goes through some customers might end up having their loans managed by another bank in the future.
Is your money safe with Metro Bank?
Metro Bank is covered by the Financial Services Compensation Scheme (FSCS) which was set up by the Government in 2001 and pays compensation to customers in the event of an authorised financial services firm going bust.
The FSCS offers protection of up to £85,000 per eligible person, per bank, building society or credit union. If you have a joint account, the FSCS deposit protection limit is £170,000. In certain cases where you have a temporarily high balance - for example, from selling a house or inheritance - you could be covered for up to £1million for six months.
Metro Bank has continued to operate its services as normal, with all its stores open as planned.