Invezz.com – Metro Bank Holdings PLC (LON: MTRO) shares trimmed recent losses significantly on Friday, but a Stifel analyst warns of continued challenges ahead.
Why is Metro Bank facing difficulties?/h2
Metro Bank has been hit particularly hard this week after reports that it wants to raise £350 million ($427 million) and £250 million of debt and equity, respectively.
The embattled bank is also reported to be in talks to offload about 33% of its mortgage portfolio to reduce capital requirements. Companies such as Lloyds (LON:LLOY) Bank, HSBC and NatWest are interested in buying a significant portion of its mortgage portfolio, according to Sky News.
The asset cut will impact the bank’s profits, which amounted to just over £16 million in the first half of 2023.
Shares of Metro Bank Holdings PLC are down more than 70% from their year-to-date high as of writing.
Stifel downgraded Metro Bank today to h2
On Friday, analysts at Stifel downgraded Metro Bank to ‘sell’, saying raising capital was likely to remain a struggle going forward. His research note also says:
There are no easy solutions for the bank, and risks on bonds remain skewed to the downside. The bank faces a difficult situation, with capital needs reaching $1 billion over the next two years.
News that it wants to raise capital is a harbinger of trouble, especially since the Silicon Valley bank that collapsed earlier this year made a similar announcement before going bankrupt, as Invezz previously reported.
Note that Fitch Ratings also cited risks to capital buffers and business model stability in placing Metro Bank on negative rating watch today.
The post Stifel sees no ‘easy solutions’ for UK Metro Bank appeared first on Invezz.
This article was originally published by Invezz.com
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