Metro Bank shares plunged to all-time lows today as hedge funds ramped up bets against the challenger bank ahead of a £350m rights issue.
Hedge funds have now shorted 12.5 per cent of the bank’s shares, making it the most shorted UK stock.
The dog-loving bank’s shares dropped 13 per cent to fresh all-time lows of 515p before clawing back some of those losses to close at 541p.
Shares have now fallen 75 per cent since the lender admitted in January that a swathe of commercial had been incorrectly classified and should have been among its “risk-weighted assets.”
The bank is also set to tap up investors for a further £350m by the end of next month.
Metro Bank’s first quarter results did little to ease shareholder concerns last week as profits halved and a number of large commercial customers left the bank following the error, which has also sparked two regulatory probes.
Pressure on the bank’s board grew more intense yesterday as shareholder advisory firm ISS urged investors to abstain on re-electing chief executive Craig Donaldson and chairman Vernon Hill.
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.
The firm also recommended shareholders vote against the bank’s remuneration report, and in particular chief financial officer David Arden’s £288,000 bonus, at the bank’s AGM later this month.
“This payment is not considered appropriate given the recent shareholder experience, including the significant fall in share price,” ISS said in a note.