Metro Bank Holdings plc (LON:MRTO) has confirmed entering into an agreement to sell a portfolio of approximately £584 million performing unsecured personal loans[4]. The transaction is expected to result in a 30 June 2024 pro-forma improvement in Metro Bank’s CET1 ratio by c81bps and total capital plus MREL ratio of c129bps from 22.2% to 23.5%.
Highlights
- Sale allows acceleration of asset rotation
- Pro-forma[2] CET1 ratio improves by c81bps upon completion
- Pro forma[2] MREL ratio improves by c129bps upon completion
- Day one gain on sale[3] c£11 million
- Guidance unaffected given very limited impact on earnings and NIM
The sale of the Portfolio is in line with Metro Bank’s strategy to reposition its balance sheet and enhance risk-adjusted returns on capital. The transaction is capital accretive and creates additional lending capacity to enable Metro Bank to continue its asset rotation towards higher yielding commercial, corporate, SME lending and specialist mortgages.
The Portfolio has a gross book value of £584 million with a weighted average rate of c5.3%. It consists of performing unsecured personal loans with an average remaining fixed-rate term of c2.4 years.
The transaction results in an estimated c£11 million gain on sale[5] upon completion.
Commenting on the transaction, Daniel Frumkin, Metro Bank’s Chief Executive Officer, said:
“The sale of our unsecured personal loan book is in line with our strategy and positions Metro Bank strongly for future growth. 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.”
The person responsible for arranging release of this announcement on behalf of Metro Bank is Clare Gilligan, Company Secretary.
- Cut-off as at 31-December-24
- Pro-forma estimated as at 30-June-24
- The final purchase price will include adjustments and reconciliations to reflect certain costs and collections in the run up to completion of the transaction. Sale is expected to complete by late Q1 2025
- Metro Bank will retain the legal title to these loans, as well as responsibility for servicing them and liability for historic and ongoing conduct issues unless caused by any servicer which replaces Metro Bank
- Gain on sale upon completion includes release of expected credit loss provision and other associated fees
