Saturday 11 May 2019 4:41 pm

Metro Bank prepares for £350m placing next week

Metro Bank will next week announce a new £350m fundraising which it hopes will end weeks of pressure over the state of its finances.

The bank has started formal talks with institutional investors, one city source told Sky News.

Read more: Major investor cuts Metro Bank stake by almost a third

It is said to have been encouraged by the feedback during the meetings.

In a statement, the bank said: "Further to recent press speculation, Metro Bank confirms that its plan to raise circa £350 million of equity capital to support its growth is well advanced. Metro Bank has commenced final discussions with existing shareholders and new investors, and the feedback continues to be positive."

The placing will be open to current shareholders, Sky reported, but Metro has also had interest from other large fund managers.

The share placing comes after accountants found an error in January, causing £1.5bn to be wiped off its market value in the ensuing months.

Later its first quarter profits halved as commercial customers left the bank.

Yesterday it was revealed that one of the bank’s largest shareholders had slashed its stake in Metro by around a third to 5.37 per cent.

Read more: Metro Bank shares plunge to all-time lows as hedge funds circle

Fidelity Management and Research used to hold a 7.55 per cent stake in the bank, a regulatory filing showed.

Metro Bank said: "The equity raise, which is subject to the committed standby underwriting agreement announced on 26 February 2019, is expected to be by way of a placing subject to shareholder approval. The company intends to respect the principles of pre-emption as far as practicable via the allocation process.

"As stated at the time of Metro Bank’s first quarter results in May, the equity raise will be completed (subject to approvals) by the end of the second quarter of 2019."