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Summary
- Shares of Metro Bank advanced more than 33 per cent on Monday following the £3.1-billion deal with NatWest Group.
- The stock of NatWest Group plunged nearly 7 per cent after the bank reported a possible reduction in CET1 ratio after completion of the transaction.
Shares of Metro Bank Plc (LON: MTRO) rallied more than 33 per cent on Monday after NatWest Group Plc (LON:NWG) agreed to acquire its mortgage portfolio. As per the deal, the Edinburgh-headquartered NatWest Group will acquire the portfolio equivalent to £3.1 billion of the prime UK mortgages of the London-based bank.
Metro Bank @ 10-month high
Following the announcement, the shares of Metro Bank zoomed as much as 33.32 per cent to a 10-month high of GBX 153.05 from a previous closing price of GBX 114.80 as on 18 December. At GBX 153.05, Metro Bank shares stand at over a 10-month high. The stock touched a high of GBX 163 on 5 March 2020. With the stock hovering near its 10-month highs, Metro Bank seemed to have recovered a substantial chunk of the losses due to the pandemic-laden crash.
Metro Bank shares (21 December)
(Source: EODHD/Others, Thomson Reuters)
The stock of Metro Bank extended the gains after opening nearly 15 per cent higher in the morning trades. The stock pared half of the gains as the trading progressed sustaining a considerable rise in the mid-afternoon deals. At 13:46 GMT, the stock of Metro Bank was trading at GBX 135.57, up 18.09 per cent. Today, Metro Bank briefly regained a market capitalisation of more than £200 million. As at 13:42 GMT, more than 5.7 million shares of Metro Bank exchanged hands translating into a total traded turnover of £2.70 million.
Also Read: Metro Bank's Q3 Lending Surpasses Its Reserve Requirements led by BBLS Loans
Natwest plunges
While, on the other hand, the shares of NatWest Group made a weekly low after slumping approximately 7 per cent. The stock of NatWest Group fell as much as 6.96 per cent to GBX 146.40 from the previous closing price of GBX 157.35 on Monday. However, the stock recovered partly in the afternoon trades after touching the weekly low in the mid-morning deals.
The stock of the banking giant took a beating on Monday after the lender informed that NatWest’s CET1 ratio is supposed to be reduced by 15 basis points from the levels seen at the end of September quarter upon the completion of the Metro Bank transaction.
NatWest Group shares (21 December)
(Source: EODHD/Others, Thomson Reuters)
NatWest-Metro Bank deal
According to the details of the Acquisition, the portfolio of Metro Bank comprises owner-occupied residential mortgages. For acquiring the mortgage portfolio to the tune of £3.1 billion, NatWest has paid a 2.7 per cent premium on the gross book value of the mortgage portfolio. The mortgage portfolio consists of a weighted average current loan-to-value of nearly 60 per cent.
NatWest is expected to get more than 13,000 customers after the successful transfer of the portfolio to the lender from Metro Bank. However, the customers will continue to be serviced by Metro Bank even after completion of the transaction.
