Sliding shares spell more woe for Metro investors
AILING Metro Bank may keep winning the gongs for customer service, but it hasn’t performed too well for its mega-rich backers recently.
Earlier this year, a slew of US business tycoons and other investors ploughed £375m into Metro to shore up its finances.
Weeks earlier, the bank had admitted an accounting error that saw it misclassify the riskiness of some loans.
Though that confession wiped £1.5bn off its market value, shares have continued to slide.
The investors who bought shares through its emergency fundraising in May did so at 500p apiece – the stock is now worth just 169.3p.
This means that the value of the new shares has already tumbled almost £250m in just under five months. Vernon Hill, the bank’s American founder, stumped up £5m and is now sitting on a paper loss of £3.3m.
But the investors who helped Metro out in May already owned hefty stakes in the lender. In total, Metro’s top nine shareholders who decided to put in more money have seen the value of their combined stakes fall by £407m.
Earlier this week Metro pulled the plug on its £200m bond issue after it received just £175m of commitments from investors – despite paying a very generous return of 7.5pc.
Yesterday, there was more speculation that Metro, which in 2010 became the first new bank to open on the UK’s high streets for more than a century, may have to put itself up for sale.
John Cronin of Goodbody stockbrokers said a sale was the ‘optimal outcome’ and predicted that the lender ‘should be potentially attractive to some of the large incumbent banks’ such as Royal Bank of Scotland, Lloyds and Barclays. Shares ended the day down 3.3pc, or 5.7p, at 169.3p.
Investors piled into Babcock as the defence contractor hailed the continued success of its warship business. Shares rose 6.4pc, or 34.4p, to 575.6p, making it the biggest riser in the FTSE 350, after it said it has seen ‘increased activity’ across the UK warship arm.
The new HMS Prince of Wales aircraft carrier set sail from Babcock’s Rosyth dockyard for the first time last week to undergo extensive sea trials.
Babcock is also working on the Royal Navy’s Type 23 frigates and recently won the contract to build five Type 31 frigates for the Royal Navy for £1.25bn. It secures hundreds of jobs at the Fife dockyard, where the ships will be assembled between now and 2027.
With trading ‘in line with our expectations’, Babcock said it was on course to hit sales and profits targets outlined in May. Its shares have risen 38pc since then, having fallen 68pc over the previous five years. On the wider market, the FTSE
100 struggled for direction, closing down 0.02pc or 1.44 points at 7289.99 while the FTSE 250 fell 144.15 points to 19774.92. Imperial Leather soap maker
PZ Cussons has said UK sales remain under pressure amid consumer uncertainty and heavy discounting in the market.
UK revenues fell in its first quarter and the group added it expects market conditions to ‘remain challenging’ but expects improvement in the second half. Shares slipped 3.1pc, or 6.5p, to 206p.
Spitfire and Bishops Finger brewer Shepherd Neame has reported pre-tax profits tumbling to £3.5m in the year to June 29, from £12.1m the previous year.
Britain’s oldest brewer saw its bottom line hit by one-off refinancing costs, as well as the end of contracts with grocery chain Lidl and Japanese brewing rival Asahi. Shares edged up by 4.4pc, or 48p, to 1145p.