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Metro Bank has been approached by investment firm Pollen Street Capital about a potential takeover that could see the UK high street lender taken private after a turbulent period as a listed company.
The London-based private equity group, which focuses on investing in financial services, made an informal approach to Metro Bank in recent weeks, according to people familiar with the matter. They cautioned that talks were at an early stage and there is no certainty of a deal.
Metro Bank, which has a market value of about £750mn, has been seen as vulnerable to a potential takeover after a tumultuous period as a publicly listed company. A deal for Metro would be another blow to London’s stock market, after 30 bids of more than £100mn for UK-listed companies already this year.
The lender, which became the first new high street bank in the UK for a century when it opened its flagship branch in 2010 and listed on the London market in 2016 at a £1.6bn valuation, has faced a number of regulatory setbacks.
Its most serious breach came in 2019 when Metro Bank admitted that it had misclassified a number of commercial loans, meaning it did not hold sufficient capital. The lender prepared a £350mn share issue and both the Financial Conduct Authority and the Prudential Regulation Authority launched an investigation.
Metro Bank was also forced to raise emergency capital in 2023, after its shares fell more than 50 per cent when it admitted that regulators had not approved a change to capital requirements on its mortgage book.
Colombian billionaire Jaime Gilinski Bacal, who became Metro Bank’s majority shareholder through that fundraising, joined the lender’s board in January last year.
Pollen Street’s interest in Metro Bank underscores how challenger banks have struggled to compete in the UK market. Nationwide Building Society completed its £2.9bn acquisition of Virgin Money last year while Shawbrook, another Pollen Street investment, has reportedly looked at a tie-up with Starling Bank.
An acquisition by Pollen Street could open the door for a deal between Metro Bank and Shawbrook. Metro rejected a bid from the specialist lender in 2023 as it sought emergency funding.
Metro Bank has since shifted away from retail banking and towards specialist lending to businesses and SMEs. Its shares have trebled since the lows they reached amid the restructuring but are still far from their peak in 2019.
Sky News previously reported the approach. Metro Bank and Pollen Street declined to comment.
https://www.ft.com/content/14eb57ed-edd6-42fa-970c-3824395e7d52
