A statement from Metro Bank said: “The company regularly assesses various opportunities in the market and accordingly confirms that it has entered in to a period of exclusivity with RateSetter, but discussions regarding the potential acquisition are at an early stage.”
The purchase of the UK-focused lender and its distribution channels could help the bank to speed up its strategy to grow the unsecured consumer lending side of the business, Metro Bank confirmed.
The bank said there was no certainty a formal agreement with RateSetter would be reached.
In the bank’s 2019 financial report, released in February, Metro said it wanted an asset book that offered a better yield and return on regulatory capital. To achieve these goals, Metro said it would be rebalancing its lending by pursuing areas such as specialist mortgages, SMEs and unsecured loans.
Metro’s full year results also revealed a drop in new mortgage from £4bn in 2018 to £2.2bn for the year ended 31 December 2019. It posted a pre-tax loss of more than £130m.
Metro, like other lenders, had felt the impact of intense mortgage market competition on its finances as margins were squeezed to win business.
The bank also sold a portfolio of buy to let loans valued at more than £500m to an affiliate of Cerberus Capital Management, the US hedge fund, in July, reportedly booking a £1.8m loss.