Bank of England Initiates Discussions with UK Lenders Regarding Metro Bank's Challenges

09 Oct, 2023

Bank of England Initiates Discussions with UK Lenders Regarding Metro Bank's Challenges

According to a report in the Financial Times, the Bank of England's Prudential Regulation Authority approached several major UK lenders this week to gauge their interest in acquiring Metro Bank (MTRO.L). JPMorgan (JPM.N) and HSBC (HSBA.L) reportedly considered making bids for Metro Bank but ultimately decided against it on Saturday, citing concerns about the additional capital required for a potential acquisition.

Both the Bank of England and HSBC declined to provide comments on the matter, while JPMorgan and Metro Bank have not yet responded to Reuters' requests for comment.

Metro Bank has recently rejected multiple takeover offers from specialist business lender Shawbrook. On Saturday, the bank engaged in discussions with bondholders regarding a potential equity injection and debt restructuring, as reported by various media outlets. The bidding process for Metro Bank is being managed by consultancy firm EY, with Metro Bank aiming to finalize a deal to secure new funds before the stock market opens on Monday.

Metro Bank has faced a series of challenges in recent years, including accounting errors, leadership changes, and delayed regulatory approvals for crucial capital reliefs. Despite these difficulties, the bank stated on Thursday that it is considering various funding options, including a combination of equity and debt issuance, refinancing, and asset sales. Metro Bank emphasized that it has met its minimum capital requirements and has not made a final decision on its fundraising plans.

In a previous Reuters report, it was noted that Metro Bank was scheduled to discuss funding options with its shareholders over the weekend, as the bank seeks to strengthen its financial position and reassure regulators after a volatile week of trading. Metro Bank's shares hit a record low on Thursday following news of the fundraising but rebounded on Friday, closing up 21% at 45.25 pence. Nevertheless, the stock has experienced a decline of more than 55% over the past four weeks.