Metro Bank shareholder Legal and General Investment Management has revealed plans to vote against chairman Vernon Hill’s re-election, ramping up pressure on the US founder.
The top 15 shareholder said it had “long standing concerns” over the bank and would vote against Hill and a number of other directors over independence concerns as well as members of its audit committee.
It comes after the challenger bank raised £375m last night as investors delivered a vote of confidence following a major loans blunder earlier this year.
Metro placed shares at 500p, a discount on yesterday’s closing price of 536.5p.
Shares have climbed more than 17 per cent this morning to 631p following the vote of confidence from investors.
Despite the surge, the bank’s stock is still down 71 per cent since it admitted in January that a swathe of commercial loans had been wrongly classified and should have been among its “risk-weighted assets.”
But the capital raise – above the £350m target – has not eased the pressure on Hill with LGIM announcing it will vote against his re-election for the second year running.
LGIM, the 11th biggest shareholder in Metro Bank, added it had concerns over the major accounting error in January and the subsequent share price drop since.
Director of corporate governance at LGIM Sacha Sadan said: “As a long term investor of our client’s assets, we hope that in sharing our voting intentions early, and that following the results of the AGM, this will encourage Metro Bank to strengthen their governance structures.”
The board has come under mounting pressure in recent weeks ahead of its AGM on Tuesday.
Pirc became the latest shareholder advisory group to urge investors to block the re-election of chairman Vernon Hill earlier this week.
The firm shared the concerns of Glass Lewis over payments made by the bank to Hill’s wife’s architecture firm Interarch, which has for the design of its branches.
Shirley Hill’s company was paid £4.5m by Metro Bank in 2018 and £4.6m in 2017.
The bank’s annual report revealed its audit committee had concluded that the service provided by InterArch provided value for the bank but that it would run a competitive tender this year to expand its suppliers.
Glass Lewis also ramped up its criticism of the bank’s governance and called for fresh faces on the board to avoid the risk of ‘group-think’.
Another proxy adviser ISS urged shareholders to abstain on re-electing Hill and chief executive Craig Donaldson.
ISS said accountability for the loans error sat with the pair, as well as directors Steve Bernau and Gene Lockhart, but noted that regulatory probes were still ongoing.