Jaime Gilinski Bacal, a wealthy Colombian entrepreneur in banking and real estate, has stepped in to help the UK’s Metro Bank, which was facing financial difficulties.
Metro Bank recently announced that it received £325 million ($396 million) from investors, with £150 million ($183 million) as new ownership shares and £175 million ($213 million) as debt.
Gilinski Bacal’s Spaldy Investments will contribute £102 million ($124 million) of the new shares, increasing its ownership from 9% to 53%.
Metro Bank was established in 2010 as a new player in the UK banking scene, challenging major banks like Lloyds, Barclays, and HSBC.
The bank’s share prices had dropped significantly last week due to reports of its financial struggles.
Although the share prices improved by 22% on Monday, they are still down by 55% for the year.
The new shares will be sold at 30 pence each, which is cheaper than the 45 pence closing price on Friday.
The Bank of England has given its approval for the deal, which also involves Metro Bank refinancing £600 million ($731 million) of debt, causing some bondholders to face losses.
Daniel Frumkin, Metro Bank’s CEO, is investing up to £2 million ($2.4 million) in the new shares.
Gilinski Bacal, who has been an investor in Metro Bank since 2019, believes in the importance of both physical and digital banking with a strong focus on customer service.
Forbes estimates his net worth at $5.3 billion, and his daughter, Dorita Gilinski, serves on Metro Bank’s board of directors.
Metro Bank has faced challenges in recent years.
After reporting a loss in 2019, it started a turnaround in 2020 but was hit hard by the COVID-19 pandemic, leading to increased bad debts and a loss of £311 million ($377 million) in 2020.
Although the bank had losses in the following years, it recently announced a profit for the quarter ending on September 30.
The bank has faced mounting pressure since mid-September when UK regulators declined its request to reduce capital requirements for residential mortgages.
Last week, Fitch, a ratings agency, placed the bank on watch for a possible credit rating downgrade, citing concerns about its capital, funding, and business model.
Despite these challenges, Metro Bank operates many branches across the UK and aspires to become the country’s leading “community bank.”
