Metro (TSX:MRU) Bank Holdings Plc, a British challenger bank co-founded by Vernon Hill, has secured a £925 million ($1.1 billion) financing package led by Jaime Gilinski's Spaldy Investments. The deal, which was announced on Sunday, includes a £325 million capital raise and £600 million in debt refinancing. Spaldy Investments contributed £102 million to the capital raise, thereby increasing its stake to approximately 53% and gaining controlling interest in the bank.
The bank's strategy also includes enforcing a 40% writedown on £250 million of tier 2 bonds, with plans to extend the remainder to 2034. An additional haircut on bonds is also planned if less than 75% of investors agree. This move resulted in a 40% loss for some bondholders.
As part of its recovery efforts, Metro Bank is considering selling up to £3 billion of residential mortgages. The bank had total assets worth £22 billion and a market value of about £78 million as of June end, with 76 branches and 2.8 million customer accounts.
The agreement aims to deliver a pro forma CET1 ratio over 13% by June 2023, an MREL ratio over 21.5%, and return on tangible equity over 9% in 2025. Willett Advisors LLC held shares in Metro Bank as of November 2021.
On Monday, the Prudential (LON:PRU) Regulation Authority (PRA) commended Metro's efforts to strengthen its capital position following a severe share price drop and the need for £600 million to bolster its balance sheet. The PRA has approved the move.
Major UK banks like NatWest, Santander (BME:SAN), and Lloyds Banking Group (LON:LLOY) considered acquiring Metro assets, but JPMorgan Chase & Co. (NYSE:JPM) and HSBC declined to bid. HSBC recently acquired the UK operations of Silicon Valley Bank post-collapse, aligning with their strategic goals as stated by CEO Noel Quinn.
Simultaneously, the UK launched the Fintech Growth Fund to strengthen its FinTech hub status amidst criticisms of barriers for FinTech entrepreneurs. In the U.S., regulatory interventions, like the U.S. Consumer Financial Protection Bureau's proposed reduction of late fees, are being considered to alleviate financial burdens.
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