Metro Bank has agreed a financing deal with investors following a volatile week of trading for the UK challenger bank.

The package includes a £325 million capital raise, made up of £150 million of fresh equity from Metro's largest shareholders and £175 million of new debt from bondholders. The announcement also includes £600 million of debt refinancing, which the bank said would enhance its balance sheet strength and accelerate earnings potential.

Daniel Frumkin, chief executive officer at Metro Bank, said: “Today’s announcement marks a new chapter for Metro Bank, facilitating the delivery of continued profitable growth over the coming years.

“Our strong franchise is underpinned by our loyal customer base and engaged colleagues and we will continue to develop the Metro Bank offer to provide the digital and physical banking services our customers expect. We thank our shareholders and noteholders for their continuing support of Metro Bank and our customers.”

The bank’s largest single shareholder, the Colombian billionaire Jaime Gilinski, will contribute £102 million of the new equity and become Metro's majority shareholder through his Spaldy Investments business with around 53 per cent ownership of the business.

Gillinski, who has a successful history of cheaply acquiring banking assets and turning them into acquisition vehicles, said: “I have been an active investor in Metro Bank since 2019. The opportunity to become the Bank’s major shareholder is driven by my belief in the need for physical and digital banking underpinned by a focus on exceptional customer service.

I believe that the package announced today enables the bank to pursue growth and build on the foundational work undertaken over the past three years.”

News emerged last week that Metro had approached investors for up to £600 million to strengthen its balance sheet, with the Financial Times reporting that the Bank of England’s Prudential Regulation Authority (PRA) had contacted a number of top banks to see if any were interested in Metro.

The FT on Sunday reported that NatWest, Santander and Lloyds were all considering bids for part of Metro. The report noted that all three, along with HSBC and JPMorgan Chase, had ruled out a full takeover bid for the bank, with a bidding process being run by accounting firm EY.

Sky News separately reported that Metro turned down a series of takeover approaches from specialist business lender Shawbrook including one made in the second half of September.

While the PRA was said to be pushing for bids for the whole bank, any buyer would have needed to inject around £500 million additional capital into the business. Metro's commitment to physical banking with the operation of 76 branches is also a reported deterrent for potential buyers.

Metro has been under scrutiny since mid-September, when UK regulators declined to approve a request to lower the capital requirements of the bank's mortgage book. The bank subsequently last week confirmed it was considering options such as a combination of equity and debt issuance along with refinancing and asset sales.

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