Metro Bank is in discussions about the sale of a portion of its mortgage book, the challenger bank has confirmed.
Reports have circulated that Cerberus Capital Management, a US-based private equity firm, is a potential buyer with Sky News reporting that a £500m slice of Metro’s book is to be sold to the firm.
In an update to the stock exchange this morning (July 22) Metro stated that it regularly assessed various opportunities in the market and confirmed discussions regarding the sale were taking place.
However the challenger bank stressed there was no certainty at this stage and did not confirm the size of the loan book up for grabs or the buyer in question.
Metro has had an embattled start to 2019 after the Bank of England found an accounting error in the firm’s books.
The bank had miscalculated its loan book risk level and over-reported its capital ratios as a result, causing its share price to plummet and its profits to halve in the first quarter.
Metro then raised £350m of capital equity, confirming in May the plans to raise funds were “well advanced” to “support its growth”. A sale to Cerberus would boost its capital once more.
Cerberus has hit the headlines over the past years for its involvement in the mortgage prisoners issue.
Mortgage prisoners are predominantly borrowers who took out a mortgage before the financial crisis but are now blocked from switching to better rates due to changes in lending practices.
After the financial crash, the government bought old Northern Rock and Bradford & Bingley loans as part of a bail-out and has since sold a portion of these loans to Cerberus.
The firm is not an active lender meaning borrowers are stuck in their existing deals.
The debacle, which is an industry wide problem, has led to MPs introducing a bill to help such borrowers transfer out to cheaper deals.
Metro’s half yearly results are expected later this week (July 24).
imogen.tew@ft.com
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