This move is part of a broader financial restructuring initiative undertaken by Metro Bank to fortify the smaller high-street lender's financial stability. The exclusive talks with Barclays centre around the potential sale of Metro Bank's residential mortgage book, a strategic manoeuvre that could enhance its capital position according to Sky.com. The disclosure of these negotiations precedes an anticipated announcement from Metro Bank, where shareholders are expected to express overwhelming support for a GBP 925 million refinancing plan.
This recapitalisation plan, which has already gained approval from bondholders, was unveiled in October 2023 following intensive weekend discussions focused on a rescue deal. Upon completion, the GBP 925 million package will result in Colombian billionaire Jaime Gilinski Bacal becoming the majority shareholder of Metro Bank.
To facilitate this financial restructuring, Metro Bank is set to raise approximately GBP 150 million in new equity and GBP 175 million in new debt. Additionally, the lender will refinance GBP 600 million of existing borrowings according to Sky. The negotiations with Barclays for the mortgage portfolio are aligned with Metro Bank's strategic efforts to strengthen its overall financial position.
In the aftermath of the recapitalisation agreement, Metro Bank reported that deposit outflows had returned to normal levels. Metro Bank officials acknowledged Barclays as a likely suitor for the mortgage book during a conference call with analysts at the FTSE 100 bank, expressing genuine interest from various parties. The expectation is that a deal with Barclays will be finalised by the end of the year.
Established in 2010, Metro Bank holds the distinction of being the first new lender to open on Britain's high streets in over a century. With around 2.7 million customers, the bank provides a range of services including current accounts, business accounts, personal loans, and insurance products. Operating through approximately 75 branches across the country, Metro Bank employs about 4,000 people.
In November 2023, the Financial Conduct Authority announced the inclusion of Metro Bank to its financial crime watchlist, with plans to keep it under supervision. The decision of the FCA follows the ongoing management of financial crime risks within the group’s back book, as well as several specific concerns over the security and effectiveness of financial crime controls within the financial institutions’ online account provisions.
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