Metro Bank: two crunch times loom for the BofE

The Bank of England prides itself on its magisterial oversight of the UK's banking sector. But Metro Bank is going to give it some thorny dilemmas in the coming months that will test its silky skills.

  • By Jasper Cox, Tyler Davies
  • 26 Sep 2019
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The challenger bank failed to access the public bond market this week. So how is it going to replace the £3.8bn of cheap liquidity loans it has from the Bank of England? 

Metro was an avid user of the Bank of England’s Term Funding Scheme until the programme was closed in February 2018. It borrowed nearly £4bn of four year debt, at interest rates close to 0.25%.

Considering that Metro this week failed even to raise £200m of four year non-preferred senior bonds, despite offering to pay 7.5%, it is going to have its work cut out refinancing its TFS loans in the coming years.

While it could turn to secured debt and depositors, it will likely have to swallow a massive increase in funding costs. Further twists and turns in the Brexit saga would not be helpful either.

The last thing the Bank of England wants to not want to create a new version of the TFS just to wean banks off the old one. But unless the outlook improves, it may well have to.

But long before that, Metro Bank has to meet a deadline set by the Bank of January 1 to raise bail-inable Minimum Requirements for Own Funds and Eligible Liabilities (MREL) debt.

This week's deal was meant to fill that requirement. After its failure, Metro may have to beg the Bank for a reprieve.

Finding a justification for this would be embarrassing for both Metro and the Bank of England, considering that the MREL market has been wide open for other issuers, and that Metro is under review by regulators for its accounting problems, which could ultimately lead to it needing more capital.

The Bank will need all its deftness to weave its way through that chicane.

  • By Jasper Cox, Tyler Davies
  • 26 Sep 2019

All International Bonds

Rank Lead Manager Amount $bn No of issues Share %
  • Last updated
  • Today
1 JPMorgan 380.40 1762 8.35%
2 Citi 351.67 1514 7.72%
3 Bank of America Merrill Lynch 302.44 1301 6.64%
4 Barclays 271.64 1137 5.97%
5 HSBC 224.52 1238 4.93%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $bn No of issues Share %
  • Last updated
  • Today
1 BNP Paribas 54.76 228 8.08%
2 Credit Agricole CIB 44.23 207 6.53%
3 JPMorgan 33.93 98 5.01%
4 SG Corporate & Investment Banking 29.88 150 4.41%
5 UniCredit 29.88 159 4.41%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $bn No of issues Share %
  • Last updated
  • Today
1 JPMorgan 13.16 82 8.29%
2 Goldman Sachs 12.58 64 7.92%
3 Morgan Stanley 12.18 55 7.66%
4 Citi 10.09 71 6.35%
5 Credit Suisse 6.93 38 4.36%