In an announcement today as part of NatWest’s results, the lender said that on completion of the transaction with Metro Bank, it expects to welcome around 10,000 customer accounts.

It noted that these would continue to be serviced by Metro Bank following the transfer to NatWest Group.

The acquisition is expected to lead to a reduction of fewer than 10 basis points to NatWest Group’s Common Equity Tier 1 (CET1) ratio. This compares a bank’s capital against its assets.

The lender said that the current weighted average loan to value (LTV) was circa 62%.

Metro Bank said that, on completion, the sale is expected to “reduce risk-weighted assets” by around £824m and improve its CET1 ratio along with its total capital.

Sponsored

Five ways we’ve improved our Premier service

Sponsored by Halifax Intermediaries

The firm said that the sale to NatWest was part of its “strategy to reposition its balance sheet and enhance risk-adjusted returns on capital”.

“The transaction is earnings-, net interest margin [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,” Metro Bank said.

Paul Thwaite, CEO of NatWest Group, said: “Following today’s announcement, we are acquiring £2.5bn of prime residential mortgages from Metro Bank and, as a result, look forward to welcoming around 10,000 customers to NatWest Group.

“This transaction is a further opportunity to accelerate the growth of our retail mortgage book within our existing risk appetite, with attractive returns. It is in line with our strategic priorities and builds on our recent acquisition from Sainsbury’s Bank.

“We are focused on a smooth transition and have a strong track record of successful integration with Metro Bank, following our previous acquisition of mortgages in 2020.”

 

Sale ‘is in line with Metro Bank’s strategy’

Daniel Frumkin, Metro Bank’s CEO, 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 under-served markets and become a specialist lender of choice.”

It was reported earlier this month that Metro Bank was revisiting its mortgage portfolio sale, having shelved the idea last year, citing market conditions.

The firm had been seeking a sale last year to improve profitability and reduce risk-weighted assets as it looked for a £925m rescue package.

This was approved by shareholders in November and was made up of £325m capital raise and £600m of debt refinancing.