Metro Bank holds talks with PRA amid reports of £600m funding raise

Urgent talks were held on Thursday 5 October at the Bank of England's Prudential Regulation Authority (PRA), with national media reporting that Metro Bank was seeking to raise £600m to strengthen its finances¹. Shares in the bank sank by 25% as a result¹.

Metro Bank opened its first branch in the wake of the 2008 financial crisis with the aim of challenging the big high street providers, and now has 76 UK branches and 2.7 million customer accounts¹. The bank downplayed any suggestion of a crisis in a statement released on the morning of 5 October, saying it was exploring "a range of options" but that no decision had been made on the way forward¹. It added that it continues to be profitable, is growing its customer numbers, and is "well positioned for future growth"¹.

Metro Bank is a UK-regulated bank and money in customers' accounts is fully covered by the Financial Services Compensation Scheme (FSCS)¹. The scheme protects up to £85,000 of deposits per individual, per financial institution, not just per bank, and also covers mortgages, insurance and investments¹. In some circumstances more than £85,000 is covered: a measure for temporary high balances, where money results from things such as house sales, redundancy pay or inheritances, means some types of funds are covered up to £1m for six months¹.

Why it matters for households

Metro Bank's 2.7 million customer accounts and 76 UK branches are affected by the reported funding talks, and the bank's shares fell 25% on the day the talks were reported¹. For customers, deposits held with the bank are covered by the FSCS up to £85,000 per individual per financial institution, with temporary high balances covered up to £1m for six months in some circumstances¹. The £85,000 limit applies per financial institution rather than per bank, so accounts held under the same licence are counted together¹. If a claim becomes necessary, lost deposits should be received within seven days of making a claim, and possibly as soon as two or three days, while compensation for endowment claims, home finance and mortgage compensation typically takes six months and straightforward insurance claims take at least three months¹.

What happens next

Metro Bank said on 5 October that it was exploring "a range of options" and that no decision had been made on the way forward¹. No further detail on the outcome of the talks at the PRA, or on the reported £600m fundraising, has been reported¹.