By Chris Dorrell
London-based activist shareholder Caius Capital has taken an £11m stake in embattled challenger bank Metro Bank.
The investment brings Caius Capital’s stake to five per cent, making it one of Metro Bank’s ten largest investors.
The upped stake from Caius Capital, an alternative investment manager focused on “distressed and special situations”, comes a month after Metro Bank was fined £10m by the Financial Conduct Authority (FCA) over an accounting scandal which has seen shares in the bank plummet since 2019.
According to the FCA, in October 2018 the lender knowingly published inaccurate information regarding its risk-weighted assets. Risk-weighted assets are used to link the minimum amount of capital that banks must retain with the risk profile of the bank’s lending activities.
When the correct information was published in January 2019, Metro Bank’s share price dropped 39 per cent and it has struggled to reassure investors since. Former CEO Craig Donaldson was forced out in December 2019.
Metro Bank was hit with a £10m fine by the FCA as a result of the failures last month. Former CEO Craig Donaldson will pay over £223,000 while ex-CFO David Arden will pay £134,600 for being “knowingly concerned” with the breach.
Although the firm has recorded a slight recovery since the scandal – including returning to profit in September – shares in the firm continue to trade down 96 per cent from their 2018 price.
Caius Capital has form when it comes to disrupting banks it invests in. In 2018 Caius Capital took a stake in Italian lender Unicredit and raised questions about notes issued by the bank which were being used as part of Unicredit’s top tier of capital.
Unicredit rejected the claims and filed a €90m (£78.8m) claim against the fund. In December 2018 the two parties reached an agreement. The fund also holds a stake in Bank of Cyprus.
City A.M. understands Metro Bank is not concerned by the investment.
Caius Capital was contacted for comment.
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