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The Colombian billionaire behind Metro Bank’s weekend financing deal has said he sees opportunities to use the UK challenger bank as a base for acquisitions — once costs are brought under control — following a similar playbook to the one he has used during four decades of dealmaking in Latin America.
Jaime Gilinski Bacal will take a 53 per cent stake in the high street bank after agreeing to contribute £102mn of new equity as part of a wider refinancing that drew a line under weeks of private negotiations to shore up Metro’s capital position.
“Once Metro becomes profitable and the business model continues to grow, we should be looking at building more value through adding more assets,” Gilinski, 65, told the Financial Times.
Metro Bank has reported underlying profits for the past three quarters. But it has not reported an annual profit since 2018, the year before an accounting debacle revealed a capital hole and sent the bank’s share price plunging.
“With some of the experience that I have had in Latin America, of buying banks with some problems and turning them around, building them to [make] further acquisitions, I feel that Metro could be a very good base to build and to grow,” Gilinski told the FT.
“We have to for sure become more efficient . . . but if we continue having a very loyal customer base, close to 3mn customers today, with good service and the right technological platform, we should be able to be profitable starting in 2024.” Metro has 2.8mn customers in the UK and £21.7bn of assets.
Gilinski, whose personal wealth is estimated by Forbes at $4.9bn, said he would draw on decades of experience in buying assets at bargain prices and turning them around in his approach to the Metro acquisition, his 14th in the financial sector.
Starting in 1991, he established a reputation for acquiring banks from big global players such as HSBC, Banca Intesa and BBVA, stripping out costs, improving technology and boosting returns.
“It’s what I have done all my life,” Gilinski said of the Metro deal. “I have been 46 years buying banks and improving their efficiencies and cost structures.”
Gilinski, whose investments stretch from banking to property and the food industry, first took a stake in Metro in November 2019 when he picked up 9 per cent after the accounting scandal and the bank’s subsequent £375mn cash call.
Despite his focus on cost-cutting, Gilinski gave his backing to Metro Bank’s branch model — a rarity for a challenger bank in a market where digital competitors eschew bricks and mortar.
“The branch network has been a high cost but it has also been a very good asset in terms of building the customer base and the loyalty and service,” he said. “It has to be renewed and made more efficient but the business model of branches is a model that works. You just have to make sure that the costs are under control.”
Gilinski also lent his support to Metro chief executive Dan Frumkin and his business plan.
Frumkin took over as chief executive at the start of 2020 following the departure of both the bank’s chair and CEO in less than a year. A restructuring specialist, he scaled back its expansion programme and planned a shift away from the competitive market for residential mortgage loans.
Metro has since sold £3bn of mortgages to larger rival NatWest in a 2020 deal that boosted its capital above a crucial regulatory minimum, and said on Sunday that it was in talks to sell up to another £3bn in residential mortgages.
“I’ve been very impressed by his leadership and he will have my support,” Gilinski said of Frumkin. “He came into the bank three years ago in a very complex situation, he has made a lot of improvements.”
Gilinski is not a newcomer to the UK, having previously lived in the country and executed a multibillion-dollar property development with London & Regional Properties, the real estate group owned by the Livingstone brothers.
Gilinski said that it was important for the UK’s domestic market that some of the challenger banks become “much bigger”.
“I think the UK is a great country and has tremendous opportunities to build value,” he said.
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