London-based Metro Bank is moving forward with plans to sell off a multibillion pound mortgage portfolio, following a recent investor bailout that saved the company from collapse. The high street lender is reportedly working with Morgan Stanley on the sale, with the exact size of the portfolio yet to be determined. According to sources in the city, the portfolio could be valued at around £4 billion.
Expressions of interest for the portfolio were due several days ago, and the process has been revived just four months after Metro Bank announced job cuts and changes to its branch opening model in an effort to control costs. The company received a £925 million lifeline in October last year, which included raising £150 million in new equity, £175 million in new debt, and refinancing £600 million of existing borrowings. This resulted in Colombian billionaire Jaime Gilinski Bacal becoming the majority shareholder.
Metro Bank had previously been in talks to sell a £3 billion mortgage book to Barclays, but negotiations fell through in December due to disagreement over the sale price. Industry experts believe that Metro Bank may need to raise additional capital in the near future as its balance sheet continues to face pressure.
Since its launch in 2010, Metro Bank has become the first new lender to operate on Britain’s high streets in over a century. The company offers a range of financial products, such as current accounts, business accounts, personal loans, and insurance, and has a customer base of approximately 2.7 million. With over 70 branches across the country, Metro Bank employs thousands of people.
Following the turbulent events of last autumn, there were concerns of a potential run on Metro Bank’s deposits. However, deposit withdrawals quickly returned to normal levels after the recapitalisation agreement was reached. The identity of potential buyers for Metro Bank’s mortgage portfolio is currently unknown, but it is expected that major British retail banks will be among them.
In other news, Boeing is set to admit to fraud in order to avoid a trial over fatal crashes, while the Labour party and Britain’s first female chancellor are facing key economic challenges. Smaller players in the industry have been involved in a wave of consolidation in recent months, with Barclays acquiring Tesco Bank and NatWest Group agreeing to purchase the majority of Sainsbury’s banking operations.
At the start of the week, Metro Bank’s shares were trading at 36.1p, giving the company a market capitalisation of £243 million. This is a significant drop from the same time in 2023, with the stock currently over 70% lower. Metro Bank declined to comment on the sale of its mortgage portfolio.
