Metro Bank insists customer deposits stable following recent fundraise
The embattled lender said daily deposit flows have now ‘returned to more normal ranges’ following the capital and financing announcement last month.
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Your support makes all the difference.Embattled high street lender Metro Bank moved to reassure investors that it has stemmed an outflow of customer deposits seen in the lead-up to its recent emergency fundraise.
The group said it had suffered a spike in deposit outflows ahead of its move to secure a major refinancing package amid worries over its financial strength.
But it said daily deposit flows have now “returned to more normal ranges” following the capital and financing announcement last month.
Metro Bank agreed a deal with shareholders for a £325 million capital raise and £600 million in debt refinancing after weekend crunch talks in early October, which saw Colombian billionaire Jaime Gilinski Bacal seize a controlling 53% stake in the bank.
The plan involved investors pumping in an extra £150 million, in return for taking over a majority of its shares.
Investors who hold Metro’s bonds will also be lending it a further £175 million as part of the capital raise element of the funding package.
In its latest update, Metro Bank confirmed it made a modest profit after tax in the third quarter, which ended before the latest fundraise was unveiled.
But it revealed tough trading for the group, with loans down 2% year-on-year at £12.5 billion and deposits falling 5% to £15.6 billion, before the outflows seen in the days leading up to the fundraise.
Compared with the first half, it said deposits edged up 1% and loans remained stable.
“Lending reflects continued controlled asset origination and as such capital resources were broadly flat relative to 30 June levels,” it said.
Shares, which have already fallen by more than 50% over the past year, were down another 3% in Tuesday morning trading.
Mr Gilinski Bacal had previously owned about 9% of the bank through Spaldy Investments, but scooped up another big chunk of the shares for £102 million as part of last month’s funding deal.
It came after Metro Bank saw its shares hit new record lows amid worries over its balance sheet and after years of trading woes at the lender, which was set up in 2010 as a challenger to the regular banks.
In 2019, it took a hit when the bank was forced to go to shareholders to raise £350 million after it discovered a miscalculation on its books.
And recently, its troubles were compounded when regulators refused to approve a request from the bank to lower the capital requirements attached to its mortgage business.
Metro Bank has 76 branches and about 2.7 million customers.