6 September 2010 – The Times
Metro Bank may raise more capital to accelerate its branch openings in Britain.
The new bank created by the American billionaire Vernon Hill could raise £30 million or more on top of the £75 million it had in the bank when it opened its doors in July, observers believe. Investors in Metro include blue-chip fund managers such as Fidelity, plus wealthy individuals, such as the Reuben brothers in Britain and Richard LeFrak, the New York-based property developer. Several investors backed Mr Hill’s original banking venture Commercebank, which he started in 1973 and sold to Canada’s Toronto-Dominion Bank in 2008 for about £4.25 billion. Some of the group, plus some new names, are keen to plough more capital into Metro Bank after the start-up reported significantly more demand than it had expected in its first six weeks, sources said. It is already part of Metro’s plan to consider a stock market listing in 2013 to raise £250 million to fund growth.
Metro may consider a private placement in the next few months.Anthony Thomson, Metro’s chairman and co-founder, confirmed that the business may tap investors for more cash in the short term. “If we continue at the rate of growth we have seen in the early days, we may well raise more capital,” he said. The level of interest so far has dwarfed expectations, Mr Thomson said. Customers streamed into its first branch in Holborn, Central London, with interest driven by disaffection with the established banks. On Friday Metro opened a second branch in Earls Court, West London, on the site of the collapsed bank BCCI. A majority of Metro’s new customers have been individuals rather than businesses, Mr Thomson said.
Metro needs to grow its loan book if it wants to make a profit, as banks are unable to make healthy profits from deposits in the present low interest rate environment.