Finance

UK’s Metro Bank shares suspended multiple times after plunging more than 25%

A close-up of a sign of Britain’s Metro Bank.
Matthew Horwood | Getty Images

LONDON — Shares of Britain’s Metro Bank were briefly suspended from trading twice early Thursday, in a volatile session that saw the stock shed more than 29% from the Wednesday close.

They have since slightly pared losses, having resumed again trading shortly after 9:00 a.m. London time.

The London Stock Exchange, which lists the stock, confirmed to CNBC that the brief suspensions were triggered by its circuit breaker mechanisms because of the extent of the volatile drop.

The halts followed reports that the bank was trying to raise £600 million ($727 million) in debt and equity, according to Reuters. The challenger bank, which launched in 2010, has a market cap of less than £100 million.

Metro Bank said in a statement that it is currently considering “how best to enhance its capital resources,” with a particular focus on a £350 million bond due to mature in October 2025.

Investors traded more than 1.6 million shares immediately after the stock market opened Thursday, according to FactSet. Typically, less than 100,000 Metro Bank shares change hands every hour.

Shares of the bank have lost around two thirds of their value since the middle of February. Metro Bank was valued at £87 million as of the Wednesday close, according to Reuters.

Last month, the Bank of England’s main regulator, the Prudential Regulation Authority, suggested that it was unlikely to allow the lender to use its own internal risk models for some mortgages.

As such, the Metro Bank would be subject to higher capital requirements — a concern that has weighed on investors.

“It has been clear for some time that [Metro] is short of capital, with the bank operating below MREL requirements,” investment bank Keefe, Bruyette & Woods said in a research note, referring to minimum requirement for own funds and eligible liabilities enforced by authorities.

The key questions now facing the bank focus on its ability to raise that capital and whether that will be sufficient to remove capital concerns, the note said.

— CNBC’s Ganesh Rao contributed to this report.

Articles You May Like

Boeing CEO blasted by Senate panel: ‘It’s a travesty that you are still in your job’
GameStop closes more than 12% lower after annual meeting fails to offer details on firm’s strategy
Steve Cohen is set to make a big push into investing in AI
How TikTok’s viral ‘no-spend month’ could come back to bite you
Warren Buffett buys Occidental shares for 9 straight days, pushes his stake to nearly 29%

Leave a Reply

Your email address will not be published. Required fields are marked *