Metro Bank Holdings PLC (LSE:MTRO) is seeking to raise £600 million from investors to fortify its beleaguered balance sheet following a series of financial setbacks and regulatory hurdles.
First reported by Sky News, the proposed debt and equity round follows the UK regulator's decision against Metro Bank's application for improved residential mortgage accreditation.
The bank's aspiration to adopt a more profitable approach to home loan lending, utilising advanced internal rating-based systems, has since been postponed.
This model would have enabled the bank to hold less capital against its mortgage assets, alleviating some of its financial pressures.
The bank's history with regulators has been tumultuous, marked by fines and penalties for publishing incorrect information to investors and other infringements.
Metro Bank was fined £10 million last December for misreporting the assets used to calculate the capital it was required to hold, leading to the most significant single-day collapse in a UK bank’s share price since the 2008 financial crisis.
This misstep resulted in the resignation of chief executive Craig Donaldson and inflicted a severe blow to the bank's reputation and investor confidence.
Shares in the challenger bank, which became the first new UK chain in a century after launching in 2010, tanked another 30% on news of the fundraise, bringing year-to-date losses to more than 70%.
Since opening its doors in 2010, Metro Bank has become one of the 10 largest banks in Britain with 2.7 million customers.