U.K. lender Metro Bank agreed to a £925 million ($1.1 billion) rescue deal this weekend that puts controlling interest in the hands of Colombian banker Jaime Gilinski Bacal, the bank announced Sunday night.
The package consists of a £325 million capital raise and £600 million of debt refinancing and follows weeks of tumult.
Last month, regulators turned down the bank’s request that capital requirements for its mortgage business be lowered; and Fitch Ratings placed the bank on negative watch last week. Metro also announced it was considering raising money from investors to shore up its balance sheet.
Bacal’s firm, Spaldy Investments Limited, will contribute £102 million, bumping his stake in the bank from 9% to 53%.
“I have been an active investor in Metro Bank since 2019. The opportunity to become the Bank’s major shareholder is driven by my belief in the need for physical and digital banking underpinned by a focus on exceptional customer service,” Bacal said in a prepared statement. “I believe that the package announced today enables the Bank to pursue growth and build on the foundational work undertaken over the past three years."
The £925 million package will allow Metro to grow its assets in the coming years through a “gradual shift in asset side growth towards specialist mortgages and commercial lending to optimise risk adjusted returns; supported by continued success in raising deposits and driving current account growth,” the bank said.
A spokesperson for the Prudential Regulation Authority, the regulatory arm of England’s central bank, said it "welcomes the steps taken by Metro Bank to strengthen its capital position,” The Guardian reported Sunday.
The PRA approached several lenders this weekend — including NatWest, HSBC, Lloyds and Santander UK, and JPMorgan Chase — in pursuit of a bailout for Metro, according to The Guardian and the Financial Times.
JPMorgan decided not to move forward with a takeover Saturday night, The Guardian reported; and though NatWest also opted out, it may consider acquiring £3 billion of Metro’s residential mortgages, or roughly 40% of its mortgage business, The Guardian reported.
Metro CEO Daniel Frumkin told analysts the bank was in discussions with Barclays for a potential sale of a portion of its mortgage portfolio, accordign to Bloomberg.
With Bacal having controlling interest, Metro is now in experienced hands. The Colombian banker built one of Latin America’s largest “banking empires … through a series of mergers and acquisitions,” in part funded by George Soros in a $50 million back-of-napkin deal for Bacal to take over the largest bank in his home country, according to Forbes.
Frumkin said Sunday’s deal “marks a new chapter” for Metro Bank as it strives to eventually become the U.K.’s “number one community bank.”
Metro Bank was created in 2010 by serial founder Vernon Hill, who years prior founded Commerce Bancorp in New Jersey. Commerce was scooped up by TD Bank, which also has its U.S. headquarters in New Jersey, in 2008, at which time TD adopted Commerce’s “America’s Most Convenient Bank” tagline as its own. More recently, Hill was CEO at Republic First Bank. He resigned in 2022 following a months-long power struggle within the bank.
