UPDATE 1-Britain’s Metro Bank to raise 350 million pounds

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LONDON, May 16 (Reuters) – Embattled British lender Metro Bank announced plans on Thursday to raise 350 million pounds ($450 million) at a cut-price 500 pence per share with an accelerated bookbuild to repair a stretched balance sheet and restore market faith.

The capital injection is needed to shore up the finances of the challenger bank, five months after it admitted it had under-reported the risk of its loan book by nearly 1 billion pounds.

The bookbuild is expected to close no later than 1500 GMT on Friday, Metro Bank said in a statement.

“Existing investors are supportive of the deal and there have been strong indications that they will buy into the placement,” said one source close to the deal. “Metro Bank had the confidence to launch the book-build because investors agreed to take part.”

The announcement follows the deepest crisis in Metro’s nine-year history, with investor and customer confidence rocked by corporate governance concerns and a freefalling stock price.

Shareholders have deserted the challenger bank in droves since the accounting mistake was disclosed in January, slashing more than 1.5 billion off its market value. ($1 = 0.7814 pounds) (Reporting By Iain Withers and Pamela Barbaglia, editing by Kirstin Ridley)

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