Colombian billionaire takes control of Britain’s struggling Metro Bank
By Hanna Ziady, CNN
London (CNN) — Jaime Gilinski Bacal, a Colombian banking and real estate entrepreneur, has taken control of Metro Bank as part of a bigger rescue deal to fill a hole in the UK lender’s finances.
Metro Bank said in a statement late on Sunday that it had raised £325 million ($396 million) from investors, split between £150 million ($183 million) of equity and £175 million ($213 million) of debt.
Of the new equity raised, Gilinski Bacal’s Spaldy Investments will contribute £102 million ($124 million), increasing its stake to 53% from 9% currently.
Metro Bank opened in 2010 as the first challenger to Britain’s major main street banks — including Lloyds (LYG), Barclays (BCS) and HSBC (HSBC) — in more than 100 years.
The capital raise comes after a sell-off last week in shares of the bank, sparked by reports that it was on the hunt for fresh funds. Metro Bank’s shares were trading 22% higher Monday but have still lost 55% so far this year.
Stock issued as part of the equity raise will be priced at 30 pence per share, a discount to the bank’s 45 pence closing price on Friday.
The Bank of England welcomed the deal, which will also see Metro Bank refinance £600 million ($731 million) of debt, causing losses to some bondholders.
Metro Bank CEO Daniel Frumkin said the deal “marks a new chapter” for the lender, which has reported losses for several years. Frumkin is investing up to £2 million ($2.4 million) in the equity raise.
Gilinski Bacal, an investor in Metro Bank since 2019, added: “The opportunity to become the bank’s major shareholder is driven by my belief in the need for physical and digital banking underpinned by a focus on exceptional customer service.”
According to Forbes, Gilinski Bacal has built one of the largest banking empires in Latin America through a series of mergers and acquisitions. The publication estimates his net worth at $5.3 billion.
His daughter, Dorita Gilinski, sits on Metro Bank’s board of directors.
Fitch warning
Metro Bank has had a challenging few years. After reporting a loss in 2019, it embarked on a turnaround the following year only to be hit by the Covid-19 pandemic. The worsening economy drove an increase in bad debts, and the bank posted a loss of £311 million ($377 million) in 2020.
The losing streak continued for the following two years, but the bank said Monday that it made a profit in the quarter to Sept. 30.
The bank’s shares have been under mounting pressure since mid September, when UK regulators refused its request to hold less capital against its residential mortgages.
Also last week, ratings agency Fitch placed the lender on watch for a possible downgrade to its credit rating, citing risks to its capital position, funding and business model.
The bank has dozens of branches across the country and says its ambition is to be the UK’s leading “community bank.”
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