Metro Bank shares have fallen by as much as third on Thursday as the high street lender are considering £600 million capital raise to shore up their finances.
After the market opened on Thursday shares settled around 23% lower after it has been reported the bank are in talks with investors to raise £250 million in equity funding along with £350 million in debt.
The bank have insisted that “no decision has been made on whether to proceed with any of these options.”
London-based brand expert Declan Ahern from Brand Finance describes the impact on the bank’s brand value, which was valued at GBP942 million earlier this year.
Declan Ahern, a leading consultant on brand valuation, said, “Metro Bank has always positioned itself as a ‘challenger’ to conventional high street banks. Yet, the recent collapse in its share price coupled with financial difficulties paints a grim picture for its brand value. Metro Bank’s brand, previously valued at GBP942 million this year, is at serious risk of erosion. Unless the bank navigates this crisis effectively, the fallout could be catastrophic for the brand, nullifying years of effort put into building consumer trust.”
The steps Metro Bank takes now will define its future brand value. Transparency with stakeholders, strategic financial moves, and an articulate brand story are imperative for recovery. The bank cannot afford a half-baked approach in its financial restructuring; it must be comprehensive and strategically sound to restore brand equity.”
Metro Bank, founded in 2010, was the first new high street bank to open in the UK in over a century. With its promise of seven-day-a-week banking and a more customer-friendly approach, the bank won significant attention. Yet, its shares were briefly suspended last week and fell over 25% by market close. This comes after a refusal by regulators to lower capital requirements tied to its mortgage business, further squeezing its financial bandwidth.
Declan Ahern led the research for the Brand Finance Banking 500 2023 report earlier this year, available online at brandirectory.com/banking/