A close-up of a sign of Britain’s Metro Bank.
Matthew Horwood | Getty Images
LONDON — Metro Bank shares were temporarily suspended from trading twice on Thursday amid a volatile session that saw the stock plummet by over 29% from its previous close.
Although the losses have since been slightly reduced, trading resumed after 9:00 a.m. London time.
The London Stock Exchange, where the stock is listed, confirmed that the temporary suspensions were triggered by its circuit breaker mechanisms due to the significant drop in share value.
The suspensions occurred following reports that Metro Bank was seeking to raise £600 million ($727 million) in debt and equity, according to Reuters. With a market capitalization of under £100 million, Metro Bank is considered a challenger bank, having been established in 2010.
Metro Bank stated in a statement that it is currently exploring options to enhance its capital resources, with a particular focus on a £350 million bond maturing in October 2025.
Immediately after the stock market opened on Thursday, more than 1.6 million shares of Metro Bank were traded, exceeding the typical trading volume of less than 100,000 shares per hour, as reported by FactSet.
Since mid-February, the bank’s shares have lost approximately two-thirds of their value, resulting in a market capitalization of £87 million at the Wednesday close, according to Reuters.
Last month, the Prudential Regulation Authority, the main regulator of the Bank of England, indicated that it was unlikely to permit the use of Metro Bank’s internal risk models for certain mortgages. This decision has raised concerns among investors as the bank would subsequently be subject to higher capital requirements.
Investment bank Keefe, Bruyette & Woods commented in a research note that “it has been clear for some time that Metro Bank is short of capital, with the bank operating below MREL requirements,” referring to the minimum requirement for own funds and eligible liabilities enforced by authorities.
The primary questions now revolve around the bank’s ability to raise the necessary capital and whether it will be sufficient to alleviate concerns.
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Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
