Metro Bank has announced the sale of a £584m unsecured personal loan book, which is expected to result in an £11m gain and give it lending capital to move further into specialist lending.
The disposal is expected to improve Metro Bank’s Common Equity Tier 1 (CET1) ratio by around 0.81% and total capital plus minimum requirement for own funds and eligible liabilities (MREL) ratio from 22.2% to 23.5%.
CET1 is the capital banks use to absorb any immediate losses, while MREL is set by the Bank of England to also absorb losses and provide for recapitalisation in resolution.
The portfolio has a weighted average rate of around 5.3% and consists of performing unsecured personal loans with an average remaining fixed rate term of around 2.4 years.
The bank said the sale would allow it to progress with its asset rotation by giving it more lending capacity to focus on higher-yielding commercial, corporate, SME lending and specialist mortgages.
Daniel Frumkin, chief executive of Metro Bank, said: “The sale of our unsecured personal loan book is in line with our strategy and positions Metro Bank strongly for future growth.
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“Upon completion, the transaction is capital-accretive and will allow us to further optimise our balance sheet as we strengthen our position as a specialist lender of choice.”
In October, the bank said it had returned to profitability, following the completion of the sale of a £2.5bn mortgage portfolio to NatWest and a £925m rescue deal.
In its annual results, NatWest said the acquisition of Metro Bank’s residential mortgage portfolio boosted its mortgage balances as it took on approximately 10,000 additional customers.
