Metro Bank Holdings PLC (LSE: MTRO
LN)
26 July 2024
Metro Bank
Holdings PLC
Legal Entity
Identifier: 984500CDDEAD6C2EDQ64
THIS
ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF
ARTICLE 7 OF THE UK VERSION OF REGULATION (EU) NO. 596/2014 ON
MARKET ABUSE, AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018.
FOR
IMMEDIATE RELEASE
Metro
Bank confirms Sale of £2.5 billion[1]
Residential
Mortgage Portfolio to NatWest Group PLC
Highlights
-
Sale
allows acceleration of asset rotation
-
Earnings are
improved in 2024 and 2025 from this sale
-
NIM
increases post transaction completion
-
TFSME[2]
to be
repaid from proceeds
-
Pro
forma MREL ratio improves by c114bps upon transaction
completion
-
Mortgages being
sold were originated in a lower rate environment, meaning the
mortgage sale results in a day one loss of c£105m at
completion
Summary
Metro Bank today
confirms entering into an agreement to sell a portfolio of
approximately £2.5 billion prime residential mortgages (the
“Portfolio”) to NatWest Group PLC ("NatWest") for a cash
consideration[3]
of up to £2.4 billion.
On completion[4]
of the transaction, the
sale is expected to reduce risk weighted assets by c£824m, and
result in a 31 December 2023 pro-forma improvement in Metro Bank's
total capital plus MREL ratio of c114bps from 22.0% to 23.1% and
CET1 ratio by c5bps.
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 earnings, NIM and capital ratio accretive, and the
sale 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 £2.5 billion with a weighted average rate of
c3.79%. It consists of primarily repayment mortgages with an
average remaining fixed-rate term of c2.3 years. The Portfolio has
a similar geographic distribution to Metro Bank's wider mortgage
portfolio and has a weighted average current loan to value of
c62%.
The 4.2% discount on
gross book value results in an estimated c£105 million loss on sale
because the loans were originated in a lower rate
environment.
Commenting on the
disposal, Daniel Frumkin, Metro Bank’s Chief Executive Officer,
said:
“The sale of part of
our residential mortgage portfolio is earnings, NIM and capital
ratio accretive. The sale is in-line with Metro Bank’s strategy to
reposition its balance sheet for higher risk adjusted returns on
regulatory capital. The additional lending capacity provided by
this sale will enable us to continue our shift into high yielding
assets in niche and underserved markets and become a specialist
lender of choice.”
-
Cut-off as at 31-March-24
-
Bank of England Term Funding Scheme with additional
incentives for SMEs
-
The final purchase price will include adjustments and
reconciliations to reflect certain limited exclusions, costs and
collections in the run up to completion of the
transaction
-
Completion of the transaction is conditional on a
satisfactory response from the Competition & Markets
Authority
Enquiries:
Metro Bank PLC Investor Relations
IR@metrobank.plc.uk
Metro Bank Media Relations
Mona Patel
+44 (0) 7815
506845
pressoffice@metrobank.plc.uk
Teneo
Haya Herbert-Burns/Anthony
DiNatale
+44 (0)7342 031051/ +44 (0)7880
715975
metrobank@teneo.com
Important
notices
This announcement is
not intended to, and does not, constitute or form part of any
offer, invitation or solicitation of any offer to purchase,
otherwise acquire, subscribe for, sell or otherwise dispose of, any
securities or the solicitation of any vote or approval in any
jurisdiction, whether pursuant to this announcement or
otherwise.
This announcement is
for information purposes only and is not intended to and does not
constitute or form part of any offer or invitation to purchase or
subscribe for, or any solicitation to purchase or subscribe for any
securities in any jurisdiction.