Troubled Metro Bank secures capital, Colombian billionaire Gilinsky takes control

LONDON, Oct 8 (Reuters) – Crisis-hit British bank Metro (MTRO.L) on Sunday agreed to raise 325 million pounds ($396.5 million) of capital and a further 600 million pounds after urgent talks over the weekend to strengthen its balance sheet. Loan refinancing announced. A week of ups and downs in business.

The deal would hand control of the majority shareholder to its biggest investor – Colombian billionaire Jaime Gilinsky – and would be a blow to bondholders, who would then turn to higher interest-paying bonds.

Metro Bank had sought to strengthen its finances after a series of setbacks in recent years, including accounting errors, leadership departures and delays in regulatory approval for major capital reliefs.

The lender – which was launched in 2010 to challenge the dominance of Britain’s big banks – said the capital raise would include the issuance of £150 million of new equity and a £175 million bail-in loan known as “MREL”. is referred to as.

The equity raise was led by Metro’s largest shareholder, Gilinsky-owned Spaldy Investments, which contributed £102 million. Once the transaction is completed, Spaldy will become the controlling shareholder with a 53% stake, Metro said.

“The opportunity to become a major shareholder of the bank is driven by my belief in the need to combine physical and digital banking with a focus on exceptional customer service,” Gilinsky said in a statement.

The deal also includes a restructuring of its debts that will extend the maturity of its borrowings, with holders of £250 million of Metro Bank Tier 2 bonds due in June 2028 getting a 40% discount.

Holders of that bond will convert into a new bond by paying a 14% interest rate, while holders of a separate bailed-in MREL bond will convert into a new bond by paying a 12% coupon.

The fundraising is scheduled to be completed in the fourth quarter, subject to shareholder and bondholder agreements.

The bank also said it was discussing the sale of up to £3 billion of residential mortgages.

“The Prudential Regulation Authority welcomes the steps taken by Metro Bank to strengthen its capital position,” the Bank of England’s Prudential Regulation Authority said in a statement.

The regulator this week approached several major banks, including HSBC (HSBA.L) and Lloyds (LLOY.L), to consider making offers for Metro.

Reuters reported on Friday that Metro Bank was set to discuss funding options with its shareholders over the weekend, after a proposal by bondholders earlier in the week was seen as handing over too much control.

($1 = 0.8196 pounds)

Reporting by Ian Withers, additional reporting by Anousha Sakoui in London, Hugh Jones and Pablo Mayo Cerquerio in London and Lavanya Ahire in Bengaluru; Editing by Lisa Shumaker

Our Standards: The Thomson Reuters Trust Principles.

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