Metro Bank in talks to offload consumer loan book portfolio
By Abigail Townsend
Date: Thursday 30 Jan 2025
(Sharecast News) - Metro Bank has confirmed it is in talks to offload its performing consumer loan portfolio, as part of a wider plan to refocus on commercial lending.
In a brief statement released after markets had closed on Wednesday, the bank said it was in early sale discussions.
"This potential transaction further supports Metro Bank's strategic shift towards SME (small and medium enterprises), commercial and corporate lending," it said. "Metro Bank continues to seek opportunities to optimise its balance sheet, in particular given the strong growth the bank has seen in new commercial and corporate lending."
It added that the transaction was likely to increase both the CET1 and MREL ratios, subject to pricing.
No further details were provided, other than to note there was no certainty a deal would be agreed. It is not known who Metro is in talks with.
According to Shore Capital, the portfolio had a gross and net carrying value of £1.003bn and £893m respectively as at 30 June 2024.
Metro launched in 2010, the first new high street bank in the UK for over a decade.
It initially sought to challenge Britain's high street banks, but is now overhauling the business to refocus on corporate customers.
It was rocked by both an accounting error in 2019 and then a change in Bank of England rules concerning the amount of capital banks need to hold.
Dan Frumkin, an American turnaround specialist, took over as chief executive in 2020, and in 2023 a rescue deal saw Colombian billionaire Jaime Gilinski Bacal take a 53% stake.
Frumkin has cut jobs, reduced opening hours and sold off some assets, including the sale of its £2.5bn residential mortgage book to NatWest last year.
As at 0945 GMT, shares in Metro were down 1% at 98.35p.
Gary Greenwood, analyst at Shore Capital, said: "No details on likely net interest margin/earnings impact, but would assume dilutive near-term until capital can be redeployed given consumer loans tend to be relatively high margin."
He said "a large bank such as Lloyds, NatWest or Barclays" might be interested in buying the portfolio, but added it "wouldn't significantly move the dial for any of those".
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