Metro Bank Shareholders to Make Crucial Vote on Rescue Deal in Bid to Secure Bank's Future

By Jace Dela Cruz

Nov 27, 2023 12:20 AM EST

Metro Bank shareholders are facing a pivotal decision as they vote on a rescue deal crucial to the bank's future. 

According to BBC, the proposed plan involves securing additional funds from investors and refinancing debt, addressing concerns about Metro Bank's financial stability that surfaced last month. The bank has underscored the likelihood of the plans gaining approval.

But a rejection by shareholders could prompt the Bank of England to consider Metro Bank "unviable," initiating a process for managing failed banks. The comprehensive deal encompasses £325 million ($409.7 million) in new funding and the refinancing of £600 million ($756.4 million) in debt.

(Photo : DANIEL LEAL/AFP via Getty Images)
Pedestrians pass a branch of British bank Metro Bank in central London on October 6, 2023. Shares in British bank Metro Bank fell by more than 30% on Thursday on the London Stock Exchange after announcing that it was considering a fundraising or asset sales, investors worried about the company's efforts to strengthen its balance sheet

Controlling Shareholder of Metro Bank

Colombian billionaire Jaime Gilinski Bacal is poised to emerge as Metro Bank's controlling shareholder, securing a 53% stake through his firm, Spaldy Investments, which is committing £102 million ($128.5 million) to the bank. 

The ongoing shareholder vote represents the last obstacle following the endorsement by bondholders in October, who are anticipated to face a 40% reduction in their investments. 

Founded in 2010, Metro Bank positioned itself as a "challenger" bank, differentiating from established High Street names by committing to seven-day branch openings. According to BBC, Metro Bank's share price has substantially declined, dropping from over £40 per share in 2018 to 39p a share on Friday.

In early October, reports suggesting the need for fundraising triggered intense speculation about the bank's future. However, Metro Bank consistently asserted the strength of its finances and compliance with regulatory requirements throughout this period of uncertainty.

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Metro Bank's Trajectory

The current shareholder vote is pivotal for Metro Bank's trajectory, determining whether the proposed rescue deal secures the necessary support to fortify its position and navigate the challenges it has encountered in recent years. 

The outcome will shape the institution's immediate future and its ability to overcome financial hurdles, signaling whether shareholders believe in the effectiveness of the proposed measures to steer Metro Bank back to a stable and sustainable path. 

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