Troubled Metro Bank locked in talks with bondholders

Troubled Metro Bank locked in talks with bondholders

Metro Bank is locked in talks with bondholders as the lender races to secure a refinancing deal before markets open tomorrow.

Its chairman Robert Sharpe said last night: ‘We’re very busy at the moment as you can imagine,’ before declining to comment further.

The bank is reportedly looking for a lifeline of up to £600million. Metro’s shares crashed last week after it confirmed that it was exploring options to bolster its capital position.

It recently rejected a takeover approach by Shawbrook, a so-called challenger bank, Sky News reported. Metro, which has 2.8 million customers and 76 branches, needs to raise cash to refinance a £350 million debt within a year.

A spokesman insisted an interest payment on that bond, which was due to be paid today, had been met.

Hands on: Metro Bank is reportedly looking for a lifeline of up to £600million

Missing this would have amounted to a default, leaving the bank at the mercy of bondholders who have lent it money. If a deal with bondholders cannot be reached Metro may have to sell most of its mortgage book.

Previous reports suggested it is selling £3 billion of its £7.5 billion residential and buy-to-let loan portfolio.

But leading analyst Grace Dargan, of Barclays, now says it may have to sell almost double that, nearly £6billion, to meet its needs. This assumes the mortgages are sold at face value, which could be ‘challenging’ if it is seen as a forced sale, she added in a note to clients.

Fears about Metro’s financial health have grown since an accounting error in 2019.

As first reported in The Mail on Sunday, Metro recently put in place ‘living will’ plans that would ensure taxpayers are not left with the tab if the bank collapses.

Metro has £15.5billion of deposits, split between retail and small business customers. These are guaranteed up to £85,000 per account which covers most personal customers, but only 57 per cent of commercial deposits.