Metro Bank is considering growth strategies and digital investment plans following a tumultuous month that nearly ended in a collapse similar to Silicon Valley Bank’s downfall in the spring.

Last week, the London-based bank’s stock plummeted 30% and talks of a necessary capital raise and potential sale swirled.

However, Sunday night the bank’s luck turned and it announced it had secured a capital package of $400 million and debt refinancing of $740 million. The bank also is in talks with banks including NatWest, Lloyds Bank and Barclays for the sale of its mortgage portfolio for $3.7 billion, according to a Metro Bank release.

Monday’s “announcement marks a new chapter for Metro Bank, facilitating the delivery of continued profitable growth over the coming years,” Chief Executive Daniel Frumkin posted on X, the platform formerly known as Twitter.

Headline – Secured £325m capital raise, comprising £150m of new equity and £175m of new MREL issuance, alongside £600m of debt refinancing, enhancing balance sheet strength and accelerating earnings potential. Read more here.

Daniel Frumkin, Chief Executive Officer at Metro Bank…

— Metro Bank (@Metro_Bank) October 9, 2023

Growth strategy leans on tech, new branches

On Wednesday, the bank confirmed that 75% of its bondholders approved the debt refinancing plans, and with the capital secured, the bank plans to get back to its growth efforts — including investing in technology and branches.

In the second quarter this year, for example, the bank was focused on investing in digital capabilities, Frumkin said during the bank’s July earnings call. The bank works to keep its digital and physical infrastructure up to date amid continual technological innovation as client tech increase and third-party providers’ infrastructures require enhancements.

This week, the bank said growth efforts would include adding automated account switching capabilities and digital origination capabilities and mobile client acquisition all in Q1 2024, along with the addition of 11 branches to its 76-branch footprint by the end of 2025.

Branch or bust

As the bank looks to brick-and-mortar branch expansion, Eric Stoclet, an indepentent advisor, and former executive at Citigroup and Abu Dhabi Islamic Bank, raised this question: Is adding branches an efficient way to spend capital as bigger banks continue to close branches?

Read more: Combining physical and digital, a new era of bank branches

More branches mean more employees and higher costs, Stoclet told Bank Automation News. He suggested that Metro might be better served by investing in AI, technology, back-office automation and call center enhancements.

Market reaction

Metro Bank stocks were down 2.3% on Thursday and trading stood at $48.85 per share before the market opened. The stock is down 34% compared to the same day last year.

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Metro Bank did not respond to Bank Automation News’ request for comment for this story.