Beleaguered Metro Bank confirms talks about a potential sale of a loan portfolio

Challenger bank Metro Bank has confirmed that “discussions regarding the potential sale of a loan portfolio are taking place” in a stock market announcement.

The news comes after press speculations that the bank was talking with Cerberus Capital Management, an American hedge fund, about offloading a mortgage portfolio. This deal could be worth £500m, according to the sources speaking with Sky News.

However, the bank avoided naming anyone it is in talks with. The stock market announcement said: “The Company regularly assesses various opportunities in the market and accordingly confirms that discussions regarding the potential sale of a loan portfolio are taking place. There can be no certainty at this stage that an agreement will be reached. A further announcement will be made if and when appropriate.”

These news comes at a particularly interesting time for Metro Bank. The company’s shares crashed in January after it revealed a major accounting error regarding how it classified its loan book. After the admission, the shares dropped by almost 40 per cent, resulting in the value of the bank dropping by almost £800m.

This did not stop Metro Bank from announcing a new personal finance service in April. The service is named Insights and uses predictive analytics and AI to monitor customers’ spending habits. This data is then transformed into prompts to boost control of finances.

Still, things got a bit problematic for Metro Bank again in early May when rumours on WhatsApp suggested that customers’ money and assets would not be safe within the bank’s accounts and safety deposit boxes. As a result, customers queued up outside branches in London, demanding to withdraw their assets. Metro Bank responded to the rumours with a statement saying that there was “no truth to these rumours and we want to reassure our customers that there is no reason to be concerned.”

After the WhatsApp debacle, Metro Bank went on to successfully raising £375m from a fundraising call to strengthen its balance sheet. The whole raise took less than three hours. At the time, Vernon Hill, chairman and founder of Metro Bank, said, “Although we’ve faced challenges in the past few months, we remain fully focused on providing the outstanding service and convenience that our customers expect of us. This growth capital will enable us to continue to expand the business and implement our strategic initiatives.”

More recently, Metro bank signed a three-year deal with Artesian Solutions, the client intelligence tool builder, to improve its compliance and KYC management. The deal was announced in June.

Copyright © FinTech Global 2019

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