Metro Bank PLC (LON:MTRO) shares surged on Wednesday as the embattled bank resuscitated a postponed bond issue on the same day that founder and chairman Vernon Hill agreed to step down.

The dog-friendly challenger bank launched the much-needed £300mln bond issue offering a coupon of 9.5% and later upped the amount to £350mln after receiving an enthusiastic reception at that chunky interest rate.

Shares in Metro were up 34% to 241p by early afternoon, recovering a small part of the 93%-plus plunge from the past 12 months amid a fug of governance and accounting issues.

Following a massive accounting blunder at the start of the year, which forced it into a £350mln equity raise and sparked investigations by the Financial Conduct Authority and Prudential Authority, last week Metro pulled the plug on a £250mln bond issue where it was offering an interest rate of 7.5% as levels of interest had only reached £175mln.

On Wednesday the bank revealed that a relaunch of the offer of senior non-preferred bonds at a higher price of 9.5% had received a warmer welcome.

“Books are now in excess of £475mln,” the bank said, with the six-year notes callable in five years.

Over the Hill

Earlier, after reported pressure from investors, American founder Hill said he would step down by the end of the year.

It is not yet clear who will replace him, though an interim chair will be appointed if a successor is not found within the next months.

Hill, the former boss of US lender Commerce Bancorp set up Metro in 2010 with architecture and interior design help from his wife’s firm, said he would resign as chairman but had been expected to remain on the board as an non-executive director.

Senior independent director Michael Snyder said: “The board shares Vernon’s view that Metro Bank has now reached a point where an independent chairperson is appropriate to oversee the next stage of our journey.”

Hill, who retains a 3.6% stake, made no comment.