BUSINESS LIVE: Metro Bank secures financing lifeline; GSK agrees £2.5bn China vaccine deal; Croda cuts profit outlook

“The asset sale is likely to attract decent interest, particularly in an environment where there is limited scope for organic loan growth for the sector.

“However, we note that as a result, MTRO (i) is likely to have to recognize a significant loss on disposal given the current higher interest rate environment, although over time this is likely to be offset by more high returns from reinvestment of proceeds in higher yielding assets and (ii) reduction of any AIRB benefit if materialized.

“Furthermore, the main challenge for MTROs is that they do not have a large enough balance sheet for the current cost base, which will only be exacerbated by asset sales. ‘

Frasers Group boss Michael Murray has announced that House of Fraser could be rebranded after taking over the business from his father-in-law, retail mogul Mike Ashley.

Mr Murray, who is married to Ashley’s daughter Anna, is prepared to ditch his father-in-law’s winning formula of selling deeply discounted shares to move the Frasers Group market.

Victoria Skolar, Head of Investments at Interactive Investor:

“Metro Bank has agreed a rescue deal – Colombian billionaire Jaime Gilinski Bacal will take control of the lender, becoming its largest shareholder, amassing a 52% stake by investing £102m in the lender. It contributes to Metro’s £325m fund raising, made up of £150m of new equity and £175m of new debt. Plus it refinanced £600m of debt. Chief executive Dan Frumkin said it was a “new chapter” for the bank

“Over the weekend, Sky News reported that NatWest and Lloyds had approached regulators about an offer for part or all of Metro Bank. Santander UK is also reported to be working on a bid as the board seeks funding solutions ahead of the opening of the London Stock Exchange on Monday morning. However, a takeover by a major lender would clearly kill Metro’s ambitions as a challenger bank.

“Last week was an extremely volatile period of trading for Metro Bank, with a sharp sell-off on Thursday following news that it was looking to raise hundreds of millions of pounds in cash to shore up its balance sheet, and Fitch put the stock in negative territory.”

“It is understood that officials from the Treasury and the Bank of England are involved in discussions about the troubled lender. The shares then rebounded sharply on Friday after reports it was trying to sell off £3bn worth of assets from its mortgage portfolio.’

London-listed shares tumbled in early trade as oil prices jumped more than 2 percent amid ongoing military clashes between Israeli forces and Hamas forces, while shares in embattled Metro Bank rose after announcing an increase in the capital.

Precious metals miners gained 0.6%, while the energy heavy sector rose 2.9%.

Aerospace and defense stocks added 1.2 percent.

Nearly half of UK businesses have said the nation’s tax regime is “unfavourable” and puts the UK behind China and other competitors.

Manufacturers are pushing for major business reform in next month’s Autumn Budget – lifting the economy “out of its current slump”.

The call comes after research published by Make UK, a manufacturing group, and RSM, a consultancy, revealed shaky confidence in the system.

British specialty chemicals group Croda International cut its 2023 profit due to inventory depletion and weak demand, particularly in its North American beauty care business.

The FTSE 100 company said it now expects adjusted group profit before tax for 2023 of £300m to £320m. It had previously forecast £370m to £400m.

Global cosmetics retailers have struggled with weak demand for most of this year, amid a slow recovery in duty-free and tourist destinations, and especially in the key market of China.

China’s biggest vaccine company Zhifei will pay GSK £2.5bn for the exclusive rights to distribute GSK’s herpes zoster vaccine in the world’s second largest pharmaceutical market.

The vaccine, called Shingrix, is GSK’s best-selling drug. The Zhifei deal is part of its drive to reach more than £4 billion in sales by 2026, GSK said.

Zhifei will buy volumes of Shingrix with a value to GSK of £2.5bn over an initial period of three years, it said in a filing to the Shenzen Stock Exchange.

Metro Bank has secured hundreds of millions of pounds in new funding, with the lender announcing a “new chapter” in its history and promising shareholders “significant” growth going forward.

The bank told shareholders on Monday it had secured a £325m capital increase and a £600m debt refinancing, “strengthening the balance sheet and accelerating earnings potential”.

It also confirmed it was in discussions about selling up to £3bn of residential mortgages, providing further breathing space on its balance sheet.

Daniel Frumkin, CEO of Metro Bank, said:

“Today’s announcement marks a new chapter for Metro Bank, facilitating continued profitable growth in the coming years.”

“Metro Bank delivered a statutory profit after tax in the third quarter of 2023 and continues to demonstrate continued momentum as we pursue our ambition to be the UK’s number one bank.

“Our strong franchise is supported by our loyal customer base and committed colleagues, and we will continue to develop the Metro Bank offering to deliver the digital and physical banking services our customers expect. We thank our shareholders and bondholders for their continued support of Metro Bank and our customers.