REG-Metro Bank Holdings PLC Metro Bank confirms Sale of £2.5 billion Residential Mortgage Portfolio to NatWest Group PLC

Metro Bank HoldingsAnnouncement

26/07/2024 07:00

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   Metro Bank Holdings PLC (MTRO)
   Metro Bank confirms Sale of £2.5 billion Residential Mortgage Portfolio to
   NatWest Group PLC

   26-Jul-2024 / 07:00 GMT/BST

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                                       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.”

    1. Cut-off as at 31-March-24
    2. Bank of England  Term Funding  Scheme with  additional incentives  for
       SMEs
    3. 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
    4. 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

    1 pressoffice@metrobank.plc.uk

   Teneo

   Haya Herbert-Burns/Anthony DiNatale

   +44 (0)7342 031051/ +44 (0)7880 715975

    2 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.

    

    

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   Dissemination of a Regulatory Announcement that contains inside
   information in accordance with the Market Abuse Regulation (MAR),
   transmitted by EQS Group.
   The issuer is solely responsible for the content of this announcement.

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   ISIN:           GB00BMX3W479
   Category Code:  DIS
   TIDM:           MTRO
   LEI Code:       984500CDDEAD6C2EDQ64
   OAM Categories: 2.2. Inside information
   Sequence No.:   336602
   EQS News ID:    1954663


    
   End of Announcement EQS News Service

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    3 fncls.ssp?fn=show_t_gif&application_id=1954663&application_name=news&site_id=reuters~~~787b94c3-8286-43cc-98b3-26b1dc52d810

References

   Visible links
   1. mailto:pressoffice@metrobank.plc.uk
   2. mailto:metrobank@teneo.com


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