Metro Bank revives £3bn mortgage sale after investor bailout
The London-listed high street lender is working with Morgan Stanley on a process to offload a major chunk of its loan book, Sky News can reveal.
Monday 8 July 2024 10:49, UK
Metro Bank is reviving plans to offload a multibillion pound mortgage months after an investor bailout rescued it from the brink of collapse.
Sky News has learnt that the London-listed high street lender is working with Morgan Stanley on a process to raise capital from the sale of the mortgages.
City sources said the size of the portfolio had yet to be finalised, with one adviser suggesting it could be closer to £4bn than £3bn.
Indicative offers are said to have been due for the portfolio several days ago.
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The revival of the process comes four months after Metro Bank said it was cutting 1,000 jobs and ending its seven-day branch opening model in an effort to exert tighter control of costs.
Last October, the company secured a £925m lifeline which saw it raise about £150m of new equity and £175m of new debt, while refinancing £600m of existing borrowings.
The rescue package saw the Colombian billionaire Jaime Gilinski Bacal becoming its majority shareholder.
Metro Bank had been in exclusive negotiations to sell a £3bn mortgage book to Barclays but ended the discussions in December after failing to agree a price for the assets.
Banking analysts believe that Metro Bank is likely to need to raise further capital in the coming months as its balance sheet comes under further strain.
Metro Bank, which has about 2.7 million customers, became the first new lender to open on Britain's high streets in over 100 years when it launched in 2010.
It offers current accounts, business accounts, personal loans and insurance products, and employs thousands of people, operating from more than 70 branches across the country.
The crisis which engulfed it last autumn triggered fears of a run on its deposit base, but withdrawals rapidly returned to normal levels in the aftermath of the recapitalisation agreement.
Suitors for its mortgage portfolio were unclear on Monday, but are expected to include large British retail banks.
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There has been a frenzy of consolidation involving smaller players in recent months, with Barclays buying Tesco Bank and NatWest Group agreeing to acquire the bulk of Sainsbury's banking operations.
On Monday morning, shares in Metro Bank were trading at around 36.1p, giving it a market capitalisation of £243m.
The stock is more than 70% lower than at this time in 2023.
Metro Bank declined to comment.