Metro Bank's weekend rescue: £925M, a bond haircut, a new owner

Metro Bank's capital position depended on how much capital regulators required against its mortgage book. When UK regulators declined to approve a change that would lower those capital requirements, the bank was left with a hole in its capital that prompted talks with the regulators. Confidence broke on Thursday 5 October 2023, when the shares plummeted by a quarter; they rebounded 21% to 45.25p the next day as rescue talks advanced.

Late on Sunday 8 October the bank announced a £925 million package assembled over the weekend: a £325 million capital raise — £150 million of fresh equity from the largest shareholders and £175 million of new debt from bondholders — alongside £600 million of debt refinancing. Holders of Tier 2 bonds faced a haircut of 40 to 45 per cent on their investments, and the new shares were priced at 30p, against a Friday close of 45p.

The price of the rescue was ownership. Jaime Gilinski Bacal, the Colombian billionaire investing through the Spaldy vehicle, put in £102 million and went from 9 per cent to a controlling stake of more than 53 per cent; chief executive Dan Frumkin invested up to £2 million. Metro Bank expected its Common Equity Tier 1 ratio to exceed 13 per cent after the deal. The bank got its breathing space; the old shareholders were diluted, and the junior bondholders paid in cash.