Metro Bank’s woes deepen as UK lender ditches debt issue

FILE PHOTO: Signage is seen outside of a Metro Bank in London, Britain, May 22, 2019. REUTERS/Hannah McKay September 23, 2019
By Abhinav Ramnarayan and Iain Withers
LONDON (Reuters) – Troubled British lender Metro Bank <MTRO.L> ditched a 250 million pound ($311 million) bond issue on Monday after failing to attract investors despite offering a hefty yield.
Metro, which launched on British high streets in 2010, has endured a torrid year after disclosing a major loan book error in January that wiped more than 1.5 billion pounds off its stock value.

The bank has struggled to rebuild investor confidence since the error, while investor concerns about the economic impact of a potential disorderly Brexit have also weighed on its share price.
The British challenger bank had launched the deal on Monday morning, looking to raise a minimum of 250 million pounds of bail-in debt known as ‘MREL’ to meet an interim regulatory deadline of Jan. 1 2020.
Even though the bank offered a chunky 7.5% yield on the new four-year bond issue — in November last year the bank was targeting a yield of 2%-4% for MREL debt — orders had only reached 175 million pounds by around 2 pm London time (1300 GMT).
The banks managing the transaction had also reduced the size of the deal sought from a minimum of 250 million pounds to 200-250 million pounds.
“Metro Bank PLC thanks the broad number of investors who have met with the company and shown interest in their potential inaugural MREL issuance. Given the current market conditions though Metro have elected to not proceed with a transaction at this time,” the lender said in a statement.

(Reporting by Abhinav Ramnarayan and Iain Withers; Editing by Susan Fenton)

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