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Highlights
- Loan Portfolio Sale: Metro Bank agrees to sell £584 million in performing unsecured personal loans.
- Capital Improvement: The transaction boosts Metro Bank’s CET1 ratio by approximately 81 basis points and total capital plus MREL ratio by 129 basis points.
- Strategic Focus: The sale aligns with Metro Bank’s strategy to prioritize higher-yielding commercial, SME, and specialist mortgage lending.
Metro Bank (LSE:MTRO) has announced the sale of a £584 million portfolio of performing unsecured personal loans as part of its strategic plan to strengthen its balance sheet and enhance capital efficiency. The transaction, set to complete by June 30, 2024, is expected to improve the bank's Common Equity Tier 1 (CET1) ratio by approximately 81 basis points and raise its total capital plus Minimum Requirement for Own Funds and Eligible Liabilities (MREL) ratio from 22.2% to 23.5% — an increase of around 129 basis points.
The loan portfolio being sold carries a gross book value of £584 million, with a weighted average interest rate of 5.3% and an average remaining fixed-rate term of about 2.4 years. Upon completion, the transaction is estimated to deliver a gain on sale of approximately £11 million, reinforcing the bank’s capital position and freeing up resources for future growth.
Strategic Shift Towards Higher-Yielding Lending
This move aligns with Metro Bank’s long-term strategy to optimize its asset mix and drive risk-adjusted returns. The capital unlocked from the portfolio sale will allow the bank to pivot towards higher-yielding segments such as commercial, corporate, SME lending, and specialist mortgages. By focusing on these areas, Metro Bank aims to capture more profitable lending opportunities and improve its position in the competitive UK banking market.
The sale not only enhances the bank’s lending capacity but also supports its broader goal of building a more sustainable and profitable business model. This strategic shift comes as the bank continues to refine its portfolio, balancing growth with prudent risk management to deliver long-term value for shareholders and customers alike.
A Customer-First Community Bank
Metro Bank remains a customer-centric institution, recognized for its high-quality service. It ranked second for personal and business service in the Competition and Markets Authority’s (CMA) Service Quality Survey in February 2025, reflecting its dedication to customer satisfaction. Since 2012, the bank has originated over £10 billion in commercial lending, highlighting its active role in supporting local businesses and communities.
With 76 stores, UK-based contact centres, and a robust digital presence through its internet banking and award-winning mobile app, Metro Bank offers customers flexible, accessible, and reliable banking services. The sale of the personal loan portfolio is expected to further empower the bank to invest in products and services that cater to evolving customer needs while maintaining its community-driven ethos.
