Sunday 20 October 2019

Metro Bank shares plunge to new low after scrapped bond auction

Troubled: Metro Bank
Troubled: Metro Bank

Donal Griffin and Alice Gledhill

Shares in British challenger bank Metro nosedived after the troubled lender shelved a bond deal, deepening concern about the strength of its finances.

The stock tumbled as much as 30pc to 190.1 pence in afternoon trading in London, the lowest level since the firm first sold shares to the public more than three years ago.

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This further drop took its decline so far this year to about 90pc.

Metro Bank's bonds also fell.

Metro Bank failed to lure investors to Monday's scrapped sale even though it offered a record coupon. The London-based lender has struggled to reassure investors since January, when it said regulators had discovered issues with the way it classified loans, contradicting previous statements.

"The postponement raises questions on what Metro Bank may look to do next," analysts at Barclays wrote in a note to clients. "With little scope to grow, we think it makes sense to dispose of assets to free up capital."

Metro Bank said Monday that it pulled the sale due to "current market conditions."

The bank set a 7.5pc yield for the bonds, which would have been almost double any previous coupon for a sterling senior non-preferred note, according to data compiled by Bloomberg.

The rate of interest "could only be characterized as a distressed price," Goodbody Stockbrokers analyst John Cronin wrote in a note to clients.

Metro Bank needs to raise fresh debt in order to meet a regulatory requirement.

Bloomberg

Irish Independent

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