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Metro Bank sells £3bn mortgage portfolio to NatWest

Metro Bank sells £3bn mortgage portfolio to NatWest

Metro Bank has confirmed the sale of a portfolio of owner-occupied residential mortgages to NatWest for up to £3.1bn.

In an announcement on Friday (December 18) the bank said the portfolio consisted of primarily repayment mortgages with an average remaining fixed-rate term of circa 2.5 years.

NatWest said more than 13,000 customers would continue to be serviced by Metro Bank following the transfer.

The portfolio has a weighted average rate of 2.08 per cent and current LTV of circa 60 per cent.

With a gross book value of £3,045m, the 2.7 per cent premium results in an estimated £83m gain on sale.

Metro Bank said the sale created additional lending capacity and enabled it to focus on higher yielding assets, such as specialist mortgages and unsecured loans.

Daniel Frumkin, chief executive officer of Metro Bank, said: "As part of the transformation strategy we set out at the start of 2020, we have been focusing on balance sheet optimisation to drive better risk-adjusted returns on capital.

“The sale of part of our residential mortgage portfolio will provide us with further lending capacity and enable us to shift our asset mix and expand our unsecured lending portfolio, following our entry into the market with the acquisition of RateSetter earlier this year.

“The transaction also removes any current need to issue MREL qualifying debt."

In August Metro Bank announced it had agreed to acquire peer-to-peer lender RateSetter.

At the time the bank said it had previously signalled its ambition to grow unsecured lending as part of its strategy to enhance returns.

Alison Rose, chief executive officer of NatWest, said about the deal: "Growing our mortgage book is an important strategic priority as we build a bank that delivers sustainable returns for shareholders. The addition of this loan book will supplement the strong organic growth that we continue to achieve.

"Our strong capital position, well above the target range, continues to provide the flexibility to navigate the uncertain environment and support our customers during the challenging times ahead."

chloe.cheung@ft.com

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