Metro Bank shares tumble as it seeks to raise funds

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Shares in Metro Bank tumbled 27 per cent on Thursday morning, after the Financial Times reported that the company was in talks about raising £600mn from investors.

The UK challenger bank is in negotiations about raising £250mn in equity funding and £350mn in debt to shore up its balance sheet, according to people with knowledge of the plan.

The shares, which had already fallen sharply in recent weeks, dropped to 37.05p as the market opened, giving the bank a market capitalisation of £62mn.

Rating agency Fitch put Metro on negative watch on Wednesday, citing increased risks to its business model, capital position and funding.

Metro said on Wednesday: “As previously stated, Metro Bank continues to consider how best to optimise its capital resources to allow it to take advantage of the deposit and asset origination platform that has been built.”

Metro became the first new high street bank in more than a century when it launched in 2010, but was rocked by a 2019 misreporting scandal that led to the exit of its chair and chief executive. Last year, the Financial Conduct Authority fined the bank and censured two former top executives over the episode.

Once the highest-profile of a wave of new lenders seeking to challenge the UK’s established banks, Metro has been beset by problems in recent years. The bank was co-founded by Vernon Hill, an American who promised to revolutionise UK banking by improving customer service and keeping branches open for longer.