Metro Bank shares lost a third of their value today after the British lender announced a sharp rise in exposure to higher-risk mortgages.
The bank also said its profits would be hit by slowing growth, raising fears of a shareholder cash call.
Metro was set up to challenge the dominance of Britain's big lenders after the financial crisis.
It reported a hefty adjustment in its risk-weighted assets (RWAs) following a review of its commercial property exposures and specialist buy-to-let loans.
It said its RWAs had risen by around £900m, ramping up pressure on its core capital ratio - a widely-tracked measure of bank strength - which now stood at 15.8%, down from 19.1% in the third quarter.
Metro Bank's shares were trading 33% lower at 1,478 pence this morning, at the bottom of London's midcap index and on course for their worst day on record.
That took the company's market valuation down to less than £1.5 billion.
The bank's chief executive Craig Donaldson declined to comment on whether the bank would need a cash call to reinforce its capital buffers, but told analysts the company "will look at all options to maximise shareholder return".
"We have a number of levers we can pull to support our capital position and we will look across that," he added.
Metro Bank raised £303m last year to replenish funds needed to deliver on targets to more than double its loan book within three years.
It had earlier said it might need to raise more cash to support these aims by 2020.
While shareholders balked at the new capital positions, Metro compounded their disappointment with a downbeat assessment on margins and competition in the UK mortgage market.
"We are operating in a very competitive environment and we continued to see that come through. We have definitely seen a softening of mortgage margins," Donaldson told analysts.
Lenders in Britain also expect demand for mortgages and credit card lending to fall by the greatest extent in several years, a Bank of England survey showed, adding to signs of an economic slowdown before Brexit.
"In light of macroeconomic risks, the company did see a change in customer behaviour through the fourth quarter," Donaldson said.
The bank said its full-year underlying pretax profit more than doubled to £50m. However, that represented a £9m miss against forecasts for the year.
Deposits came in at £15.7 billion compared to a £16.3 billion forecast, with growth slowing to 6% quarter-on-quarter, compared with 7.8% at the third quarter stage, analysts at Goodbody said.
