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LONDON (Alliance News) - Legal & General Group PLC's investment management arm said Friday it intends to vote against the re-election of Metro Bank PLC's Chair Vernon Hill at the challenger bank's annual general meeting scheduled on Tuesday.
Legal & General Investment Management - which voted against Hill's re-election last year too - said it has "concerns" over Metro Bank's recent "accounting errors" and "significant share price underperformance".
LGIM said it will also be voting against "select" members of the lender's audit committee and directors it has "independent concerns" over.
"As a long term investor of our clients' assets, we hope that in sharing our voting intentions early, and that following the results of the AGM, this will help encourage Metro Bank to strengthen their governance structures," said Sacha Sadan, LGIM director of corporate governance.
Prior to Metro Bank's placing announced this morning, LGIM held a 2.02% stake in Metro Bank.
LGIM said it has "long standing concerns" with Metro Bank. At the lender's 2018 AGM, LGIM voted the re-election of Hill and the approval of the remuneration report. In total, 3.7% of Metro Bank shareholders voted against Hill's re-election with 6.5% voting against the approval of the remuneration report.
The investment manager said it raised these issues to highlight "a lack of independent directors on the Metro Bank's board, poor gender diversity, pay not in line with best practice standards and failure by the company to manage conflicts of interest".
Shares in Legal & General Group were down 0.7% Friday at 277.50 pence each.
Earlier Friday, Metro Bank said it raised GBP375 million in a much needed equity raise after UK regulators found an accounting error in its loan book at the start of the year. The challenger bank said the GBP375 million raised exceeded its initial target of GBP350 million.
Metro Bank will issue a total of 75.0 million new shares - which were underwritten by RBC Capital Markets, Jeffries International Ltd, and Keefe, Bruyette & Woods. The placing price of 500 pence represents a 5.2% discount to Metro Bank's five day average closing price on Thursday.
Metro Bank closed Thursday at 536.50p. Year to date, the shares are down almost 70%. On Friday, however, Metro Bank's shares were up 17% on the day at 637.65p each.
Justifying the need for the capital raise, on Thursday, the lender explained it had been hit by a mix of macroeconomic difficulties such as regulatory changes and the low-interest rate environment as well as "company-specific factors".
In January, the lender announced it had underestimated the risk on its commercial loans and needed to raise capital to compensate for the shortfall and, as a result, was forced to issue an update highlighting the increased risk.
