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December 5, 2013updated 04 Apr 2017 1:00pm

Metro Bank bids for £387.5m investment

UK bank Metro Bank has revealed plans to raise £387.5m ($633.37m) to fund its development.

By Isabella Grotto

UK bank Metro Bank has revealed plans to raise £387.5m ($633.37m) to fund its development.

The high-street lender has said it will deploy the funds towards increasing its lending operations and opening new branches.

The bank is yet to return a profit and currently operates through 22 branches across London and the South-east England.

It aims to increase its branch presence almost ten-fold to 200 by 2020, by reaching out to both existing and new investors in a move that marks its largest ever funding bid.

In particular, £110m worth of fund will come from new investors who have reportedly been encouraging Metro to expand its share offering.

Speaking to shareholders on 4 December 2013, the bank’s chairman Vernon Hill and chief executive Craig Donaldson announced the capital-raise increase, attributing it to "exceptionally strong demand".

They said: "The follow-on offer will be at the same price as the original, £13, and will consist of the sale of 7,692,308 A Ordinary (common) shares, raising up to a further £100m.

"This additional capital raise will be used to further support Metro Bank’s continued unprecedented growth in deposits, lending and accounts," they added.

The news follows reports at the beginning of November that Metro Bank was canvassing existing investors for £250m in funds.

The move was widely believed to be linked to the Bank’s push for a larger role in the UK banking environment, following the passing of regulation approving seven-day current account switching.

Hill and Donaldson expressed confidence in the bank’s ability to fulfil existing shareholders’ orders from the current offer, set to close on 6 December, adding: "We then expect to be able to fulfil orders from new shareholders in the follow-on offer."

Metro Bank had announced losses of £14.3m before tax in the three months to September and £38.6m over the last 12 months, putting the bank’s total losses at almost £140m since its establishment in 2010.

Commenting on the losses, Hill and Donaldson reassured shareholders that 2013 Q2 results "will therefore have marked the peak quarterly loss and that quarterly losses will now fall until the bank achieves profitability".

 

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