Metro Bank revives £3bn mortgage sale after investor bailout | Business News

Metro Bank is reviving plans to shed a multibillion-dollar mortgage months after an investor bailout brought the bank back from the brink of collapse.

Sky News has learned that the London-listed lender is working with Morgan Stanley on a process to raise capital by selling the mortgages.

City sources said the size of the portfolio has not yet been finalised, with one councilor suggesting it could be closer to £4bn than £3bn.

Indicative offers for the portfolio are said to have been due several days ago.

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The resumption of the process comes four months after Metro Bank announced it was cutting 1,000 jobs and ending its seven-day branch opening model in an effort to exercise tighter cost control.

Last October, the company secured a £925m lifeline, which allowed it to raise around £150m in new equity and £175m in new debt, whilst also refinancing £600m of existing loans.

The rescue package saw Colombian billionaire Jaime Gilinski Bacal become its majority shareholder.

Metro Bank was in exclusive talks to sell a £3 billion mortgage portfolio to Barclays, but ended talks in December after failing to agree a price for the assets.

Banking analysts believe that Metro Bank will likely need to raise more capital in the coming months as its balance sheet comes under greater pressure.

Metro Bank, which has around 2.7 million customers, became the first new lender to open on Britain’s high street in more than 100 years when it launched in 2010.

It offers checking accounts, business accounts, personal loans and insurance products, and employs thousands of people, operating in more than 70 branches across the country.

The crisis that hit last autumn sparked fears of a run on its deposit base, but withdrawals quickly returned to normal levels following the recapitalization deal.

The suitors for its mortgage portfolio were unclear on Monday, but are expected to include major British retail banks.

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There has been a consolidation frenzy involving smaller players in recent months, with Barclays buying Tesco Bank and NatWest Group agreeing to acquire the majority of Sainsbury’s banking operations.

On Monday morning, Metro Bank shares were trading at around 36.1p, giving it a market capitalization of £243m.

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Metro Bank declined to comment.