Metro Bank to discuss funding options with shareholders this weekend -source

By Iain Withers and Anousha Sakoui

LONDON (Reuters) -British lender Metro Bank is set to discuss funding options with its shareholders over the weekend, a source with knowledge of the matter told Reuters, as the lender seeks to shore up its finances and assure regulators after a volatile week of trading.

Metro Bank is considering a number of funding options after a series of setbacks in recent years, including accounting errors, leadership departures and delayed regulatory approval for key capital reliefs.

A proposal from Metro’s bondholders offering a 600 million pound ($733.98 million) capital injection is viewed by the bank as handing over too much control, and equity holders are being consulted, the source said.

Metro has been in constant touch with its principal regulator – the Bank of England’s Prudential Regulation Authority (PRA) – as it evaluates its options, including a potential sale of part of its mortgage book, the source added.

Metro Bank and the Bank of England declined to comment.

Metro Bank’s largest shareholder is Colombian billionaire Jaime Gilinski, who owns around a 9% stake through his investment vehicle Spaldy Investments. Gilinski’s daughter Dorita sits on Metro Bank’s board.

The Gilinski Group did not immediately respond to a request for comment.

There is no indication customer deposits could be at risk. Metro Bank’s customer deposits, like those of other UK banks, are backed by a government guarantee up to 85,000 pounds.

Metro Bank said on Thursday its options included a combination of equity and debt issuance, as well as refinancing and asset sales. It said that it met its minimum capital requirements and had not made a decision on fundraising plans.

The announcement came after reports that the company was seeking to raise as much as 600 million pounds in debt and equity.

The news wiped a quarter off Metro Bank’s share value on Thursday as its shares hit a record low. They pared losses on Friday to close up 21% at 45.25 pence. The stock has fallen over 55% over the past four weeks.

Jefferies on Friday said it dropped coverage of Metro Bank “due to a reallocation of resources.” It’s final rating on the stock was a “buy” with a price target of 190.00 pence.

($1 = 0.8175 pounds)

(Reporting by Iain Withers and Anousha Sakoui; additional reporting by Nelson Bocanegra in Bogota and Rodrigo Campos in New York; editing by Kirsten Donovan, Chris Reese and David Gregorio)