Metro Bank to raise £350m following accounting blunder
Metro Bank has announced plans to raise £350 million through a new share sale as it looks to plug a shortfall linked to an accounting error that saw nearly 40% wiped off its value on one day.
The lender said on Tuesday that it has entered into a “standby underwrite agreement” with RBC Capital Markets, Jefferies and KBW for the equity raise.
The transaction is expected to be launched in the first half of 2019 after consultation with shareholders, Metro added.
It comes just weeks after Metro told the market it had miscalculated the risk weighting of commercial loans secured on property and certain specialist buy-to-let loans.
As a result, the group has been forced to raise fresh capital to make up for the shortfall on its balance sheet.
Chief executive Craig Donaldson has come under particular fire over the debacle for insisting that it was the bank that detected the accounting error as part of a review of its year-end accounts.
Metro later admitted that it was in fact pointed out first by the Bank of England and not unearthed by the lender.
The episode has raised serious questions over the chief executive’s future.
At the time, the disclosures led to shares in the high street bank dropping almost 40%.
Shares in Metro Bank closed down nearly 16% at 1,300p on Tuesday.