Shares of troubled British lender Metro Bank (MTRO.L) surged in early trading on Monday after frantic negotiations over the weekend due to turbulent trading resulting in a fundraising arrangement overnight to strengthen its balance sheet.
On Sunday, Metro announced a 325 million pound ($396 million) capital increase and a 600 million pound debt restructuring in a transaction that would give its biggest investor, Colombian billionaire Jaime Gilinski, majority shareholder control.
Although the arrangement seemed to safeguard the bank’s immediate viability, Gary Greenwood, a banking analyst at Shore Capital, said it marked “a very painful rescue” since it hurt the bank’s shareholders and bondholders.
Shares of Metro Bank were up as much as 22% at the start of trading and were last up 9% at 49.4 pence.
After a spate of setbacks in recent years, such as accounting problems, managerial changes, and a delay in regulatory clearance for crucial capital reliefs, the lender has worked to strengthen its financial position.
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