Metro Bank’s fundraiser gets £375 million, secures future prospects

Date: 18th May 2019

Metro Bank has been successful at not only meeting its targeted amount of funds but transcending that amount by £25 million as well. The bank raised a total of £375 million from its shareholders which has secured its future prospects that seemed to not be as impressive.

The uncertainty that had been there in the past had resulted in a nosedive of the share price of the company. It dropped by 75 percent during the course of this year. However, after the fundraiser, it increased on Friday by an impressive amount.

Vernon Hill, the founder of Metro Bank, expressed his gratitude for the existing as well as new shareholders who bought the stake at the bank, which was priced at 500p. Earlier, there had been an issue regarding the calculation of capital of the bank due to an accounting error.

The error causing the capital miscalculation led to great distress in customers, many of whom withdrew deposited funds in the bank. However, the Bank of England recently said in a statement that Metro Bank has sufficient liquidity and resources to adequately serve its existing customers.

Back in January, the bank had miscalculated the level of risk from certain commercial loans it released to customers which made the bank vulnerable since it did not have sufficient capital to back the loans. But, the fundraiser has played its part in ensuring that the financial position of the company is back to health.

Metro Bank has paid the price of the error. The pre-tax profits reflected the reduction in consumer confidence and the adverse effects of the miscalculation. The pre-tax profits declined to £6.9 million in the first quarter, which was significantly lower than last year’s Q1 profit of £10 million.