Shareholders have raised $478 million for U.K. challenger bank Metro Bank after an internet hoax raised concerns over the value of the institution.
Reports in Bloomberg on Friday (May 17) said Metro Bank surpassed its fundraising goal, pricing shares at 500 pence, though that compares to the 1,718 pence share value seen at the beginning of the calendar year. Shares jumped more than 26 percent after news of the bank’s share sale.
According to separate reports by Verdict.co.uk, the fundraise followed a hoax spread online via messaging app WhatsApp claiming financial instability at the bank and leading some clients to withdraw their funds from accounts and items from safety deposit boxes, according to reports. In a statement, the Bank of England praised Metro’s fundraising efforts.
“The Prudential Regulation Authority welcomes the steps taken today by Metro Bank,” it said. “Metro Bank is profitable and continues to have adequate capital and liquidity to service its customer base. It has raised additional capital in order to fund future growth.”
The challenger bank said those funds would propel its efforts to strengthen its small business financial services position and to open new 30 new branches in the U.K. by 2023.
In addition to share value volatility and the online hoax, other challenges Metro Bank has faced this year include a cyberattack on the bank in February, which targeted vulnerabilities in text messaging between the institution and its customers. Other financial institutions were targeted by the fraudsters, Metro Bank said at the time.
Prior to that, the Bank of England threw another wrench in the bank’s wheels when it found accounting irregularities at the bank, noting that the Prudential Regulation Authority and analysts had raised concerns about the matter 18 months prior, with some calling for the resignation of Metro Bank Chief Executive Officer Craig Donaldson.
Those challenges didn’t prevent Metro Bank from securing a portion of RBS funds allocated by the government to boost small business banking competition. The financial institution obtained nearly $156.8 million.