US-based Metro Bank has reached a financing deal with its investors that includes both a capital raise and some of debt refinancing. The agreed-upon package consists of a GBP 325 million capital infusion.

This includes GBP 150 million in new equity from Metro's major shareholders and GBP 175 million in fresh debt from bondholders. The primary contributor of the new equity, Colombian billionaire Jaime Gilinski Bacal, is set to become Metro's majority shareholder. Known for acquiring banking assets inexpensively and transforming them into acquisition vehicles in Latin America, Bacal's control over the bank is expected to be solidified through this deal.

Metro's financing package also encompasses GBP 600 million in debt refinancing, involving a 40 to 45% reduction in investments for holders of Metro's riskier tier 2 bonds. In a statement, Metro's CEO, Dan Frumkin, described the package as a 'new chapter' for the bank, while Bacal expressed confidence that the package would enable the bank to pursue growth and build upon its foundational work of the past three years. Metro's board has been engaged in discussions with investors regarding the capital injection and has explored interest from major UK banks in acquiring some of its assets.

Potential buyers for Metro's assets Reportedly, NatWest, Santander, and Lloyds Banking Group were contemplating bids for certain assets of the bank. Launched in the UK in 2010, Metro Bank has amassed 2.8 million customers and GBP 21.7 billion in assets according to the Financial Times. It gained recognition for its distinctive customer service but suffered a stock market valuation setback after a significant accounting error in 2019.

In September 2023, UK regulators declined to approve a change that would have reduced the capital requirements on Metro's mortgage book, potentially enhancing the bank's profitability. In addition to the financing package, Metro is in discussions about potentially selling up to GBP 3 billion in residential mortgages, a move that is expected to bolster the bank's capital ratio by reducing its risk-weighted assets by around GBP 1 billion. Regulatory approvals for Metro's financing deal will include a comprehensive change of control assessment by the Bank of England's Prudential Regulation Authority, given that Gilinski Bacal's Spaldy investment venture is set to own over 50% of Metro's shares post-agreement.

The PRA has welcomed Metro Bank's efforts to strengthen its capital position, and the Financial Conduct Authority, which co-regulates Metro with the PRA, will also assess the financing deal. .