UK retail banking company Metro Bank has confirmed that it is pursuing the sale of a loan portfolio, as reported by various media publications.
A Metro Bank store in Borehamwood. (Credit: Philafrenzy/Wikipedia.org)
The move from Metro Bank comes in the wake of an accounting blunder, reported Reuters. The accounting error is said to have taken a toll on the bank’s financial position, by cutting down its market value by £1.5bn.
The bank did not disclose any details on the type of loans to be offloaded or the name of the potential buyer.
However, Sky News reported that the British high street lender is working on a deal to sell a mortgage portfolio to US private equity firm Cerberus Capital Management for £500m.
Metro Bank, in a statement, 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.”
Last year, the bank signed a deal to buy mortgage debt from various companies associated with Cerberus for £523m, having bought a mortgage portfolio in June 2017 from the US private equity firm for a sum of £596.7m.
In June 2019, Metro Bank raised a capital of £375m by selling new shares to investors following concerns regarding its financial position in the aftermath of the accounting error.
Earlier this year, the high street lender said that commercial property loans and loans to commercial buy-to-let operators, worth hundreds of millions of pounds, were inaccurately classified in risk terms instead of been among its “risk-weighted assets” (RWAs). After the accounting blunder came into light, the shares of the bank came down crashing.
In February 2019, Metro Bank raised £120m in funding from BCR, which the bank intended to use for supporting small and medium-sized businesses. At that time, the bank said that it planned to open new stores in the northern UK by the end of 2025 apart from focusing on an existing store opening programme.
Founded in 2010, the high street bank provides retail, commercial, business, and private banking services to its customers.