The private equity group focuses on investing in financial services and made an informal offer to Metro Bank recently. However, talks are currently in the early stages, and there is no certainty regarding the deal. This move could see the challenger bank being taken private after a challenging period as a listed company.
The bank is seen as vulnerable to a takeover as it has experienced regulatory setbacks. Its biggest breach was in 2019, when the bank admitted that it had misclassified a number of commercial loans and was left without enough capital. Metro Bank prepared a GBP 350 million share issue for the FCA, and the Prudential Regulation Authority launched an investigation.
Additionally, the lender was forced to raise emergency capital in 2023 after its shares plummeted more than 50%, when it admitted that regulators had not approved a change to capital requirements on its mortgage book. At the time, it rejected a bid from the lender as it sought emergency funding. Metro shifted away from retail banking ever since, focusing on lending to businesses and SMEs. Its shares have increased three times since the lows they reached amidst the restructuring, but they are still far from their 2019 peak.
Pollen Street’s deal for Metro Bank could mean another setback for London’s stock market, as a quarter of its major 2021 listings were delisted, while those remaining lost GBP 10 billion in value. The initiative could potentially make room for a deal between Metro Bank and Shawbrook.
The move reflects how challenger banks have struggled to compete in the UK market. Other examples are Nationwide Building Society’s acquisition of Virgin Money in 2024, which was valued at GBP 2.9 billion, and Shawbrook, another Pollen Street investment, has allegedly looked at a tie-up with Starling Bank.
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