This content is not available in your region

Shares in Metro Bank jump as fundraising hopes rise

Access to the comments Comments
Shares in Metro Bank jump as fundraising hopes rise
FILE PHOTO: Staff serve customers at the first branch of Metro Bank in Holborn in central London July 29, 2010. REUTERS/Toby Melville/File Photo   -   Copyright  Toby Melville(Reuters)
Text size Aa Aa

(Reuters) – Shares in Metro Bank rose on Wednesday on speculation the British lender was poised to announce a plan to shore up its finances, after an accounting error in January knocked investor confidence and sent the shares tumbling.

Metro Bank has been battling to restore confidence after the major accounting error in January wiped more than 1.5 billion pounds off its market value.

The stock was 12.8 percent higher at 5713 pence at 1040 GMT, taking it to the top of London’s midcap index.

Metro’s shares have lost 75 percent of their value since the disclosure in January. They fell again on Monday after weekend social media postings led to customer queues at some London branches, prompting the British bank to reassure depositors and investors.

The bank said on Saturday that its plan to raise money from existing and new investors to bolster its balance sheet and support its growth was well advanced.

Metro declined to comment on speculation the fundraising would be announced after the market close on Wednesday, but the rally softened the impact of a fresh bearish assessment of the lender’s prospects by analysts.

In their note published on Wednesday, analysts at Berenberg halved their target price on the stock to 1,200 pence, citing greater-than-expected investor dilution following the lender’s cash call and the impact of slower growth.

“Metro continues to suffer from acute uncertainty pending completion of its 350 million planned capital raise, dilution from which drives material EPS downgrades,” Berenberg analysts said.

“While Metro’s plan to moderate growth should enable a more stable path for returns, alongside still-meaningful growth, we believe the bank will continue to rely on inorganic capital actions,” the analysts said.

Metro Bank revealed this month the damage an accounting error had inflicted on its business, with a halving of its quarterly profit, a drop in its capital buffers and an exodus of major business customer deposits.

(Reporting by Noor Zainab Hussain in Bengaluru, additional reporting by Iain Withers, writing by Sinead Cruise; Editing by Elaine Hardcastle)

euronews provides breaking news articles from reuters as a service to its readers, but does not edit the articles it publishes. Articles appear on for a limited time.