Thursday, April 22, 2021
Finance

Metro Bank sells mortgage book to NatWest in £3.1bn deal

Metro Bank

Although ownership will change hands, Metro Bank will continue to handle the loans

Metro Bank PLC has said it will generate a one-off £83mln profit from the sale of a book of high-quality UK household mortgages to NatWest Group PLC.

The portfolio has a gross book value of £3.05bn with a weighted average rate of 2.08% and consists of primarily repayment mortgages, said the challenger bank.

There is an average remaining fixed-rate term of 2.5 years with a weighted average current loan to value of around 60%, it added.

In a statement Daniel Frumkin, Metro Bank’s CEO, said: As part of the transformation strategy we set out at the start of 2020, we have been focusing on balance sheet optimisation to drive better risk-adjusted returns on capital.

The sale of part of our residential mortgage portfolio will provide us with further lending capacity and enable us to shift our asset mix and expand our unsecured lending portfolio, following our entry into the market with the acquisition of RateSetter earlier this year. The transaction also removes any current need to issue MREL qualifying debt, he added.

Although ownership will change hands and Natwest gets the economic benefit, Metro Bank will continue to service and handle the loans.

Metro Bank said the 2.7% premium on gross book value results in an estimated £83 million gain on the sale.

On completion, the disposal is expected to improve Metro Bank’s liquidity ratios significantly with 30 September 2020 pro-forma total capital plus MREL ratio of 400bps (4%) from 20.2% to 24.2% and its pro-forma CET1 ratio of 16.3%.

Alison Rose, NatWest’s chief executive, commented: Growing our mortgage book is an important strategic priority as we build a bank that delivers sustainable returns for shareholders. The addition of this loan book will supplement the strong organic growth that we continue to achieve.

Important:

The articles are for information purposes only and Invest for Property shall not be held responsible for any errors, omissions or inaccuracies within it. Any rules or regulations mentioned within the website are those relevant at the time of publication and may not be the most up-to-date.

Invest for Property does not endorse any of the products or services that appear on it or are linked to it and are not liable for any action that you may take as a result of the content of this website, or losses or damage you may incur doing so.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Please remember that investments of any type may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

Leave a Reply

five × 2 =