Metro Bank Shares Fall Further as Short-Sellers Pile Pressure

(Bloomberg) -- Metro Bank Plc shares slumped to a fresh low as investors bet that the struggling British lender will fall further as it attempts to raise 350 million pounds ($455 million).

The bank is the most shorted company on the London market, with 13% of its shares out on loan to funds speculating on its stock price falling, according to data compiled by Bloomberg. Many investors have raised their bets against the bank since February, when it revealed problems in the way it classified certain home loans.

Odey Asset Management LLP has taken the largest short against Metro with a 3.83% position, which topped up earlier this month. Marshall Wace LLP has the next largest short with a trade worth 1.89% of the bank’s shares, which it also increased this month.

Shares in Metro were down more than 10% at 2:09 p.m. Thursday and on course for their lowest close since selling shares in 2016. On Wednesday, the stock lost just under 7% and the shares are on a five-day losing streak, their worst run since March. The bank, founded by American entrepreneur Vernon Hill, has lost more than two-thirds of its market value so far this year.

Results last week from the bank showed that some business customers had withdrawn deposits since its accounting problems were revealed, sending its shares and bonds tumbling. Metro has said that it expects to complete a fundraising by the end of this quarter.

“I believe it is dropping as investors become increasingly aware that Metro will need to do another capital raise next year if it only raises 350 million pounds this year. So, they might scale up the issue, which means a deeper discount, I would suspect,” said John Cronin, financials analyst at Goodbody.

A spokeswoman for Metro Bank declined to comment on the share price fall.

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