Colombian banking and real estate entrepreneur Jaime Gilinski Bacal has assumed control of Metro Bank as part of a larger rescue deal aimed at shoring up the UK lender’s finances.
This move follows Metro Bank’s recent efforts to secure additional funds to address its financial challenges.
Metro Bank announced that it successfully raised £325 million ($396 million) from investors, consisting of £150 million ($183 million) in equity and £175 million ($213 million) in debt. Of the new equity capital, Jaime Gilinski Bacal’s Spaldy Investments has contributed £102 million ($124 million), increasing its stake in the bank to 53% from its previous 9% ownership.
Established in 2010, Metro Bank was the first challenger bank to enter the UK market in over a century, aiming to challenge established banking giants like Lloyds, Barclays, and HSBC.
The capital injection comes after a significant drop in Metro Bank’s share price last week, sparked by reports of its capital-raising efforts.
While the bank’s shares were up 22% on Monday, they have seen a 55% decline this year. New shares issued as part of the equity raise were priced at 30 pence per share, a discount from the bank’s 45 pence closing price on Friday.
The Bank of England welcomed the deal, which also includes Metro Bank refinancing £600 million ($731 million) in debt, resulting in losses for certain bondholders. Metro Bank CEO Daniel Frumkin expressed his optimism about the transaction, describing it as a “new chapter” for the bank, which has reported losses for several years.
Jaime Gilinski Bacal, an investor in Metro Bank since 2019, sees this opportunity as driven by his belief in the importance of blending physical and digital banking with an emphasis on exceptional customer service. Forbes estimates his net worth at $5.3 billion, citing his role in building one of Latin America’s largest banking empires through mergers and acquisitions. Gilinski Bacal’s daughter, Dorita Gilinski, sits on Metro Bank’s board of directors.
Metro Bank has faced financial challenges in recent years, reporting losses in 2019 and 2020. However, it announced a profit for the quarter ending September 30, 2023.
In addition to the financial struggles, the bank’s share price has been under pressure since regulators refused its request to hold less capital against residential mortgages in September.
Ratings agency Fitch also recently placed the lender on watch for a potential credit rating downgrade due to risks related to its capital position, funding, and business model.
Metro Bank, with numerous branches across the UK, aims to establish itself as the country’s leading “community bank.”
Source: CNN
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