Metro Bank revives multibillion pound mortgage sale after rescue

Metro Bank is reportedly reviving a plan to sell a multibillion-pound chunk of its mortgage book after being rescued from potential collapse last year.

The high street lender has hired bankers from Morgan Stanley to work on a plan to raise capital from the sale of the mortgages, Sky News reported, citing unnamed City sources.

The size of the portfolio is reportedly yet to be finalised, with suggestions that it could end up between £3bn and £4bn. Indicative offers for the portfolio are said to have been due several days ago.

Metro Bank declined to comment when approached by City A.M.

The bank previously explored the sale of a £3bn mortgage portfolio last year, reportedly entering exclusive talks with Barclays, but abandoned the plan in December. Lloyds Banking Group and Natwest were also said to have been interested.

That sale effort came as part of urgent measures to bolster Metro Bank’s balance sheet after the Bank of England did not approve its request to use its own models to assess risks on its mortgages and assets last September.

Jaime Gilinski Bacal, a Colombian billionaire, swooped in to rescue Metro Bank by leading a £925m refinancing package overwhelmingly backed by shareholders in November. Bacal took a controlling stake of around 53 per cent in Metro Bank as part of the deal.

Metro Bank is now embarking on a restructuring to rein in costs and boost investor returns, including cutting 1,000 jobs and ending its seven-day branch opening model. The firm’s share price is down 70 per cent over the last year.

News of Metro Bank’s revived sale plan comes amid a spree of dealmaking in British banking, including mergers between mid-sized lenders and large retail banks snapping up chunks of smaller players.

In February, Barclays agreed to buy Tesco’s core retail banking business for £600m, while Natwest last month inked a deal to acquire most of Sainsbury’s Bank.