Metro Bank wins shareholder support for £925mn refinancing deal

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Metro Bank has secured overwhelming shareholder support for the issue of new shares as part of a £925mn refinancing deal to shore up its balance sheet.

The refinancing package, which includes £150mn of new equity and £175mn of fresh debt, was announced last month following emergency talks with regulators.

More than 90 per cent of shareholders in the UK high street lender voted in favour of the equity raise on Monday, despite the fact that the cash call will heavily dilute their investments in the bank.

“This is testament to [shareholders’] belief and confidence in the future of Metro Bank and proves there is a place in retail and business banking for our model of stores in major towns and cities, combined with online and mobile banking and great customer service,” the bank said.

Some £600mn of existing lending is also being refinanced as part of the deal. Bondholders had already approved the debt element.

Metro faced a capital hole after the Bank of England refused in September to grant it capital relief for mortgage lending until at least 2024. 

Under the terms of a refinancing deal hashed out with regulators over the space of a weekend last month, the bank’s largest shareholder — Colombian billionaire Jaime Gilinski Bacal — agreed to raise his stake in the bank from just below 10 per cent to 53 per cent.

Metro Bank has distinguished itself by betting on physical branches and in-store customer service at a time when most banks have retrenched from the high street.

Gilinski, a veteran dealmaker with a history of bank acquisitions, told the Financial Times last month that Metro could become a platform for further deals once its finances have been shored up, and gave his backing to its branch model.

Metro said on Monday it was looking to expand its branch network in the north of England over the next two years.

In addition to the refinancing package, Metro is in talks to sell as much as £3bn in residential mortgages in an attempt to further bolster its capital position. A £3bn sale would reduce its risk-weighted assets by about £1bn, the lender said last month.

Shares in the high street lender, which was co-founded by American entrepreneur Vernon Hill, have declined more than 60 per cent since the start of the year.