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Metro Bank Plunges: UK’s Struggling Bank Suspended Multiple Times Amid £600 Million Equity Debacle
Metro Bank Plunges
Metro Bank, one of the UK’s leading retail banks, has seen shares suspended multiple times after plunging more than 25%. The bank is currently attempting to raise £600 million in debt and equity, according to Reuters.
The bank initially suspended its shares in March of 2020 due to their share price dropping by 20%. On October 5th, 2020, Metro Bank’s share price dropped by more than 25%, prompting the bank to once again suspend its shares.
The bank is attempting to raise £600 million to help bolster its capital reserves. This capital raise is seen as an attempt to improve the bank’s balance sheet and increase investor confidence. The bank is also looking to sell off non-core assets to help bolster its reserves.
The suspension of Metro Bank’s shares signals trouble for the bank and could spell further financial difficulty in the months ahead. Investors are advised to proceed with caution and to watch the situation closely as the bank plans to raise capital and reduce its debt.
Metro Bank Shares Suspended
In yet another sign of the troubled times facing the banking sector, Metro Bank shares have been suspended multiple times this week after plunging more than 25 percent. The UK-based bank was attempting to raise £600 million in debt and equity. According to Reuters, the financial institution was set to launch a £250 million bond sale on Tuesday, with the aim of alleviating some of its current financial burdens. Despite the suspension being declared, investors appear to be increasingly pessimistic about Metro Bank’s prospects, having seen its market value drop to less than £200 million.
The suspension of its shares came as a shock to many, with the bank being forced to admit that it had been facing challenges for some time. The announcement follows on from Metro Bank’s decision to stop taking deposits from customers, as well as its failure to make good on loans it had taken out earlier this year. The lender’s share price has now fallen to less than half of its June 2019 high of £20 a share, further causing further distress to its shareholders.
The UK’s financial regulator, the Financial Conduct Authority (FCA), has been closely monitoring the situation, with the Financial Services Compensation Scheme (FSCS) also launching an investigation into the bank’s activities. While the exact causes of the suspension are still not known, it is thought that the bank’s ongoing capital requirements could be a factor.
The situation has dealt a major blow to Metro Bank’s reputability, with analysts citing its current troubles as further evidence of a wider decline in the sector. The news means that Metro Bank has joined a long list of high-profile British banks that have encountered difficulties in recent years, with many facing similar difficulties due to the global pandemic.
The bank has since announced that it will be taking further steps to stabilise its operations, with the company’s founder, Vernon Hill, saying that he was still committed to improving the bank’s long-term prospects. Moreover, the bank has offered investors the chance to convert their bonds into equity, something that could help to shore up its financial position.
For now, investors and customers alike are left in the dark and the bank’s future remains uncertain. It is likely that the next few weeks will prove vital in determining how the current situation will be resolved, with much riding on the success of its efforts to raise additional capital.
Metro Bank Shares plummeted 25%
UK’s Metro Bank has suspended its shares multiple times this week after they plummeted more than 25% on Tuesday. A number of trading halts occurred, with the last one at around 14:45 BST on Thursday, according to Reuters. This all occurred after the bank announced its plans to raise up to £600 million in debt and equity. The bank has since stated that it is “evaluating a range of options to raise capital”.
After an initial drop on Tuesday, shares in Metro Bank fell a further 21% on Wednesday. This caused the FTSE250 index, which includes the company, to drop by 7%. The company statement released on Thursday, which explained the planned capital raising, attempted to improve the situation by citing the bank’s “stable and strong” financial position. However, the markets have remained highly volatile, with the shares suspended and the company’s estimated market value dropping to less than £400 million.
The need for the bank to raise such a large sum of money has brought into question its stability and solvency, as well as the wider UK banking system. Metro Bank’s CEO, Daniel Frumkin, said in the statement that the bank had “consulted extensively with stakeholders including regulators” before deciding to take the capital-raising route.
The UK Financial Conduct Authority (FCA) also said on Wednesday that it was “closely monitoring” the situation. The FCA’s remarks accompanied news that the Bank of England had convened an emergency meeting with the major UK banks to discuss the situation at Metro Bank. Metro Bank currently employs more than 4,000 people in its UK branches.
This is not the first time Metro Bank has seen its shares suspended. In July, its shares were suspended after the company announced that it had fallen victim to a cyber-attack. It was later revealed that the attack had caused a significant loss of customers’ data.
The news of the potential capital raising and share suspension has caused some investors to question the stability of the UK banking system, with many citing Brexit-related uncertainty and other external factors as possible causes. Metro Bank, however, has claimed that the capital raising is merely a “precautionary measure” and that the bank remains in a “stable and strong” financial position.
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Disclaimer:
The information provided in this article is for informational purposes only and should not be considered as investment advice. The stock market can be volatile, and investing in stocks carries risks. Always do your own research and consider consulting with a financial advisor before making any investment decisions.
