Metro Bank sells £521m mortgage book as profits fall

Earlier this week, Metro announced that that it was considering a "potential disposal of a loan portfolio".

Rumours that Metro Bank was planning to offload part of its loan book began in January after it miscalculated the risk level of a large number of commercial loans, leaving a £350m shortfall on its balance sheet.

The Bank has now sold the portfolio, primarily retail buy-to-let mortgages, to Cerberus Capital Management.

Metro said the sale would have no impact on its customers as it has continually been services by an external provider, having been purchased from Cerberus back in 2017.

An expected loss of £1.8 million will be recognised in Q3, reflecting the difference between the sale price and the carrying amount on the balance sheet.

Its half-year results show that year-on-year profits fell from £20.8m to £3.4m.

Following the loss in profits and the loan book sale Metro Bank's chairman, Vernon Hill, announced that he will be stepping down after an independent, non-executive chair has been appointed.

Metro Bank ('the Bank') today announces that it will start the process of recruiting an independent, Non-Executive Chair. Mr Hill believes that the Bank has now reached a size and scale where it is appropriate to appoint an independent Chair. This transition will also ensure that the Board continues to evolve in-line with best practice corporate governance guide lines.

Hill will remain as a non-executive director, Ffounder and Ppresident.

Paul Riseborough, chief commercial officer at Metro Bank, said: “Within our H1 2019 results, we confirmed the sale of a £521m loan portfolio to Cerberus.

“The loans in this portfolio are not Metro Bank-originated mortgages. Metro Bank originally bought this loan portfolio from Cerberus in 2017, and Cerberus has now re-acquired the portfolio.

“The lender of record for this portfolio has been, and will continue to be, Capital Home Loans Mortgages (a wholly-owned subsidiary of Cerberus); therefore there is no impact on these mortgage-holders as a result of this sale.”