The embattled high street lender Metro Bank can proceed with a multimillion-pound rescue deal after receiving approval from its shareholders.
The move comes after the bank announced last month it had negotiated a £925m package, which consisted of £325m of new capital as well as £600m of debt.
As part of the emergency funding deal the bank’s largest shareholder, the Colombian billionaire Jaime Gilinski Bacal’s Spaldy Investments, is taking its stake in the struggling bank from 9% to 53% by contributing £102m of the new capital.
The bank told the London Stock Exchange on Monday that the refinancing proposal had been passed “with very strong support with over 90% of shareholders voting in support of all resolutions”.
The rescue follows a tumultuous autumn for Metro, when its shares plummeted by a quarter on one day in October after it revealed it was considering raising hundreds of millions of pounds from investors. The share price then rebounded by 21% the next day on reports the bank had been sitting on an offer for a £600m capital injection from bondholders.
The bank was plunged into the crisis after it emerged it needed more money to ensure it can continue to expand, as it had not been holding enough assets that could be quickly sold off at short notice to cover unexpected losses.
Metro was hoping to reduce that requirement by getting permission from the Bank of England to use its own internal models to assess its mortgage risks. However, that request was denied in early September, triggering a steady sell-off of its shares.
The lender is also considering selling off up to 40% of its mortgage book to shore up its balance sheet and ensure it can continue to expand. On Monday, Sky News reported that Metro had opened exclusive talks with Barclays about selling £3bn of its mortgages.
Metro was founded in 2010 by the US billionaire Vernon Hill, the first new high street bank to launch in the UK in more than 150 years. It has 2.7 million customers, 76 branches – mostly in the south of England – and holds about £15.5bn-worth of UK customer deposits.
Metro shares were up about 7% on Monday at 41.7p.
