Metro Bank shares down despite assurances on £350m share sale

Metro Bank Plc stock touched another record low despite the British lender's assurances that its £350 million (€404 million) share sale to repair its finances was well advanced.

Metro has started “final discussions with existing shareholders and new investors, and the feedback continues to be positive,” the firm said in a statement, confirming reports over the weekend. The bank said the sale would be completed by the end of the second quarter, sticking to a schedule announced in February.

Shares in the bank have lost three-quarters of their value since regulators found that some of Metro’s mortgages were given the wrong risk weighting. The decline deepened earlier this month, when the firm said some business customers had pulled their deposits in the first quarter. Over the weekend, Metro moved to reassure customers after a photo of queues at a branch in Harrow, northwest London, was posted on social media.

There is "significant urgency" for Metro to get the share sale done, wrote Robert Sage, an analyst at Macquarie Capital, who reduced his earnings per share estimates by more than 30 per cent for 2020 and 2021. "Capital is, in our view, at minimum levels."

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Metro, which has become the most shorted company on the London stock market, fell as much as 9.5 per cent in early trading on Monday. The company’s bonds also fell.

While “the perception of a stock overhang persists, the share price continues to decline, and our expectations of the price at which the equity issue will be made continue to reduce,” Sage wrote.

‘Increased queries’

Metro Bank branches are open seven days a week. Over the weekend, its Twitter account fielded multiple questions from people who said they were customers. Some said there was a queue in their local branch. The bank said that there were “increased queries” about access to safe deposit boxes.

"We've seen reports of some false rumours about Metro Bank on social media and messaging apps," Anthony Silverman, a spokesman for the firm, said in an emailed statement on Saturday. "There is no truth to these rumours and we want to reassure our customers that there is no reason to be concerned."

Metro was among the challenger banks that appeared in Britain after the financial crisis, taking on the nation's four big established lenders. Led by the American entrepreneur Vernon Hill, the bank has been dotting southeastern England with branches while the legacy lenders close them, aiming to attract retail customers and their deposits with better service and longer hours.