Metro Bank share price up as unconditional trading begins on London Stock Exchange and Jefferies initiates coverage with a buy

 
Lauren Fedor
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A New High Street Bank Is Launched In Holborn
Customers at Metro Bank's first branch in Holborn (Source: Getty)

Shares in Metro Bank are trading above the price of the British challenger bank's initial public offering (IPO) today, the first day of unconditional trading for the stock on the main market of the London Stock Exchange (LSE).

The stock is trading at 2,200p per share this morning, compared to an IPO price of 2,000p per share.

The bank announced last Friday that it had reached its target of raising £400m equity capital, and the lender's shares jumped 7.5 per cent on their so-called introduction to the LSE Monday morning.

The bank had lowered its share price from £24 to £20 last month due to market volatility and a sell off of banking stocks since the beginning of the year.

But the £20 per share offer price gave the company a market capitalisation of about £1.6bn – enough to ensure that the bank is set to be promoted to the FTSE 250 index later this year.

Metro Bank was founded in 2010 and opened its first branch in Holborn. The challenger has a network of 40 branches in and around London, and is targeting a network of 110 branches by the end of 2020.

Meanwhile, analysts at Jefferies initiated coverage of the lender this morning with a buy rating and a price target of 3,000p per share.

Praising Metro's "unique model", Jefferies said Metro Bank generates revenue per square foot of £750, already placing it among the UK's top three retailers.

"As more of Metro Bank's stores become profitable and the store count goes from the current level of 40 to around 110, we believe that the bank will become profitable in 2017," Jefferies said.

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