Metro Bank, a UK-based retail and commercial bank, has agreed to sell a £584m ($739.5m) unsecured personal loan portfolio.
This move aligns with the bank’s plan to reposition its balance sheet and improve risk-adjusted returns on capital.
Go deeper with GlobalData
The early stages of talks regarding the sale of its consumer loan portfolio surfaced in January.
In a stock exchange filing, the bank said that it expects the deal to enhance its CET1 ratio by approximately 81bps and its total capital plus MREL ratio by around 129bps, from 22.2% to 23.5%.
The sale is not only “capital accretive” but also creates additional lending capacity, anticipated to help the lender pivot towards higher-yielding commercial, corporate, SME lending, and specialist mortgages.
The portfolio, with a weighted average rate of around 5.3%, comprises performing unsecured personal loans with an average remaining fixed-rate term of approximately 2.4 years.
Upon completion of the transaction, Metro Bank estimates a gain of around £11m.
The bank has approved over £10bn in commercial lending since 2012.
It offers retail, business, commercial and private banking services through its network of 76 stores, internet banking, UK-based contact centres, and a mobile app.
Metro Bank CEO Daniel Frumkin 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.”
In November last year, Metro Bank was fined £16m by the Financial Conduct Authority (FCA) for lapses in its anti-money laundering systems.
