Metro Bank has publicly put itself up for sale, three years after its near-collapse and £925m rescue, in a move that could hand its Colombian billionaire investor a £427m windfall.
The bank made the rare decision to announce on Thursday that it was open to offers, a move that pushed its share price up 7% by mid-morning and valued the bank at about £1.3bn.
Metro was launched in 2010 by US businessman Vernon Hill as the first high street bank to open in the UK for more than 100 years. It attracted customers and offered dog-friendly branches open seven days a week.
If successful, a sale would give Jaime Gilinski Bacal, 68, a chance to sell out of the bank he helped save. He took a seat on Metro's board after securing a 53% stake three years ago and has seen a sixfold increase in the value of his shares, bought for just 30p each as part of the wider rescue deal. At Thursday's share price of 190p, his British Virgin Islands-based vehicle Spaldy Investments could cash out with a £427m windfall. Forbes puts Gilinski Bacal, one of the wealthiest people in Latin America, at about $16.9bn (£12.7bn).
The bank has struggled since a major accounting blunder in 2019 prompted investors to dump their shares and fearful customers to pull their cash, leading to the resignation of top executives and then chair Hill. Its shares took another dive in 2023 when it emerged the bank would need more cash from investors after failing to convince regulators it could be trusted to assess its own risks. The rescue that followed was brokered in part by regulators at the Bank of England.
Since then Metro has pursued a turnaround plan, lending more heavily to businesses and people with more erratic incomes, which has increased its profits but came at a cost for staff and customers. Chief executive Daniel Frumkin slashed more than 1,000 jobs in spring 2024 and decided to close branches on Sundays.
The bank said a sale was just one of the options on the table and that it would still be able to go it alone if no suitable bidder came through. Its board "unanimously believes that evaluating potential interest in the company" through a potential sale "will maximise the value creation opportunities available to shareholders and deliver benefits for all stakeholders".
Analysis
Why This Matters
- A sale could end the independence of Metro Bank, which launched in 2010 as the first new UK high street bank in more than a century.
- Gilinski Bacal's potential £427m payday from 30p shares shows how profitable rescuing troubled lenders can be for well-capitalised investors.
- The outcome affects Metro's customers and staff: the turnaround plan was built on more than 1,000 job cuts and the end of Sunday branch openings.
Background
Metro Bank launched in 2010 as the first new UK high street bank in over 100 years, offering dog-friendly branches open seven days a week. A 2019 accounting blunder and a 2023 cash shortage forced a £925m rescue brokered in part by Bank of England regulators, in which Gilinski Bacal took a 53% stake. His turnaround has boosted profits at the cost of jobs and branch hours.
What to Watch
- Whether a suitable bidder emerges and at what price: Metro said a sale was one option and it could continue on its own.
- The share price, which at 190p would give Gilinski Bacal a £427m exit through Spaldy Investments.
- Any buyer's plans for the branch network and staff, given the cutbacks already made under the turnaround.
Checked
12 claims in this story checked against 1 source: 12 supported.
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- SupportedMetro Bank publicly announced on Thursday that it was open to bids, three years after its near-collapse.UK news | The Guardian: “Metro Bank is putting itself up for sale three years after its near-collapse, in a move that could hand a £420m windfall to its Colombian billionaire investor, Jaime Gilinski Bacal. Metro Bank made the rare decision to publicly announce it was open to bids on Thursday”
- SupportedThe sale could give Jaime Gilinski Bacal a £427m windfall.UK news | The Guardian: “That means that at Thursday’s 190p share price, his British Virgin Island-based vehicle Spaldy Investments, could cash out with a £427m windfall.”
- SupportedGilinski Bacal’s shares were bought for 30p each as part of the rescue deal.UK news | The Guardian: “has already seen a sixfold increase in the value of his shares, which he bought for just 30p each as part of a wider rescue deal.”
- SupportedAt Thursday’s share price of 190p, Spaldy Investments could cash out with £427m.UK news | The Guardian: “That means that at Thursday’s 190p share price, his British Virgin Island-based vehicle Spaldy Investments, could cash out with a £427m windfall.”
- SupportedThe announcement pushed Metro Bank’s share price up 7% by mid-morning and valued the bank at about £1.3bn.UK news | The Guardian: “The announcement pushed the share price up by 7% by mid-morning, valuing the bank at about £1.3bn.”
- SupportedGilinski Bacal took a seat on Metro’s board after securing a 53% stake three years ago.UK news | The Guardian: “The 68-year-old banking tycoon, who took a seat on Metro’s board after securing a 53% stake three years ago”
- SupportedForbes puts Gilinski Bacal’s wealth at about $16.9bn (£12.7bn).UK news | The Guardian: “Gilinski Bacal is one of the wealthiest people in Latin America, worth about $16.9bn (£12.7bn), according to Forbes.”
- SupportedMetro Bank’s board said it “unanimously believes that evaluating potential interest in the company” through a potential sale “will maximise the value creation opportunities available to shareholders and deliver benefits for all stakeholders”.UK news | The Guardian: “Metro’s board “unanimously believes that evaluating potential interest in the company” through a potential sale “will maximise the value creation opportunities available to shareholders and deliver benefits for all stakeholders”, the bank said.”
- SupportedMetro Bank’s rescue deal was £925m and took place in 2023.UK news | The Guardian: “Metro Bank has been focused on a turnaround plan – which has involved lending more heavily to businesses and people with more erratic incomes – since it was forced into the £925m rescue deal in 2023.”
- SupportedA major accounting blunder in 2019 prompted investors to dump shares and fearful customers to withdraw cash, leading to resignations among top executives and the then chair, Vernon Hill.UK news | The Guardian: “However, it struggled after a major accounting blunder in 2019 that prompted investors to dump their shares and fearful customers to pull their cash. It led to the resignation of top executives, as well as the then chair, Hill”
- SupportedMetro’s turnaround plan involved heavier lending to businesses and people with more erratic incomes, increased profits, and came at a cost for staff and customers.UK news | The Guardian: “Metro Bank has been focused on a turnaround plan – which has involved lending more heavily to businesses and people with more erratic incomes – since it was forced into the £925m rescue deal in 2023.”
- SupportedChief executive Daniel Frumkin cut more than 1,000 jobs in spring 2024 and decided to close branches on Sundays.UK news | The Guardian: “Metro’s chief executive, Daniel Frumkin, slashed more than 1,000 jobs in spring 2024 and decided to close branches on Sundays.”