Financial institution Metro Bank receives £925 million bailout
In a significant turn of events, Metro Bank, the U.K.'s challenger bank, has announced a £925 million rescue deal on Sunday night. The deal, which consists of a £325 million capital raise and £600 million of debt refinancing, puts controlling interest in Metro Bank in the hands of Colombian banker Jaime Gilinski Bacal.
Bacal, who built one of Latin America's largest banking empires through a series of mergers and acquisitions, will increase his stake in the bank from 9% to 53% with his firm, Spaldy Investments Limited, contributing £102 million to the deal. This move comes after the Prudential Regulation Authority (PRA) approached several lenders, including NatWest, HSBC, Lloyds and Santander UK, and JPMorgan Chase, for a potential bailout for Metro Bank.
The package aims to shift asset growth towards specialist mortgages and commercial lending, a strategic move that aligns with Metro Bank's ambition to eventually become the U.K.'s number one community bank. The deal follows a challenging period for Metro Bank, with the PRA turning down its request to lower capital requirements for its mortgage business last month.
The news of the potential sale of a portion of Metro Bank's mortgage portfolio to Barclays, as reported by Bloomberg, adds another layer to the bank's strategic shift. However, the nature of the commercial or retail aspects of the potential sale with Barclays remains unclear.
Notably, Bacal's acquisitions were funded in part by George Soros in a $50 million deal, as reported by Forbes. Soros also significantly contributed to the financing of Bacal's banking empire in Latin America.
The PRA welcomed the steps taken by Metro Bank to strengthen its capital position, a sentiment echoed by the market, as Fitch Ratings placed Metro Bank on a negative watch last week. The deal is expected to enable Metro Bank to grow its assets in the coming years, providing a much-needed boost to the bank's growth prospects.
Vernon Hill, the founder of Metro Bank, who also founded Commerce Bancorp in New Jersey and later resigned from Republic First Bank in 2022 following a power struggle, will likely be watching the developments at Metro Bank with interest. The bank, which was acquired by TD Bank in 2008 and adopted Commerce's "America's Most Convenient Bank" tagline, has faced numerous challenges in recent years.
With the new ownership in place, Metro Bank is poised to embark on a new chapter, aiming to solidify its position as a leading community bank in the U.K. and continue its growth trajectory in the specialist mortgage and commercial lending sectors.
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