This week, Lloyds Banking (LON: LLOY) and NatWest Group (LON: NWG) received inquiries about the possibility of acquiring a part of Metro Bank’s (LON: MTRO) mortgage portfolio, as the latter aims to reinforce its financial foundation.
Consultants from the up-and-coming bank reached out to their larger counterparts regarding the purchase of roughly 30% of the mortgage portfolio, as stated in an overnight report by Sky News.
The lender verified yesterday that chairman Robert Sharpe had discussions with regulatory authorities following the surfacing news that Metro plans to secure up to £600 million, divided between new stock and debt.
Despite a 60% drop in share prices over the previous month, there was a 6% surge to 39.8p today.
Metro’s advisers have proposed around £2.3 billion from the bank’s £7.5 billion mortgage assets to bigger competitors, aiming to raise capital and decrease regulatory capital obligations, as cited by the FT.
Shore Capital’s analyst Gary Greenwood mentioned that the bank finds itself in a challenging predicament. Without securing additional funds, it won’t be able to expand its loan portfolio, which would hinder profitability growth.
He emphasized that operating so near to the baseline regulatory standards could worry depositors, possibly resulting in significant withdrawals.
He added in a note, “The bank must act swiftly to strengthen its financial position. If it’s unable to assure the regulatory body of its strategies, it might lose control over its next steps.”
