Shares in Metro Bank (MTRO) fell to an all-time low this week, after the lender failed to raise at least £200m from the sale of senior unsecured bonds yielding 7.5 per cent.
The financing, required to meet EU regulations for banks to build loss-absorbing sources of capital, was viewed as a key test of market sentiment. Shares in the lender have been crushed during the past year by questions over corporate governance, strategy, management credibility and an unfolding regulatory investigation.
This backdrop appeared to darken last week, when the bank disclosed that a Financial Conduct Authority probe into the circumstances that led to the mis-categorisation of risk-weighted assets had been widened to include “certain senior members of management”.
In an unpunctuated statement issued the day after news of the failed issue first emerged, the lender thanked “the broad number of investors” who showed interest in the sale, and blamed “current market conditions” on the decision to not proceed.
“As a responsible issuer Metro shall consider future issuance mindful of all relevant stakeholders,” the statement added.
Metro has until 1 January to raise funds to comply with the first stage of the so-called MREL (minimum requirement for own funds and eligible liabilities) directive, which would raise its own funds to 21.5 per cent of risk-weighted assets, including regulatory buffers.
Earlier this month, the Bank of Ireland pulled the sale of a €300m (£264m) junior bond with a 2.2 per cent coupon, which analysts put down to Brexit-linked market jitters.
