Metro Bank Confirms Sale of £2.5 Billion Residential Mortgage Portfolio to NatWest Group

Metro Bank Holdings PLC has reached an agreement to sell a portfolio of approximately £2.5 billion prime residential mortgages to NatWest Group PLC. The transaction is valued at up to £2.4 billion in cash.

The sale aligns with Metro Bank's strategy to accelerate asset rotation and enhance returns on capital. The expected outcomes include improved earnings for 2024 and 2025, increased net interest margin (NIM), and enhanced capital ratios. Specifically, the pro forma MREL ratio is anticipated to improve by about 114 basis points upon completion.

The portfolio, characterized by an average weighted rate of 3.79% and primarily composed of repayment mortgages, is projected to achieve a day-one loss of approximately £105 million due to its origination in a lower interest rate environment.

CEO Daniel Frumkin remarked that this strategic move will provide additional lending capacity, allowing Metro Bank to focus on higher-yielding commercial, corporate, and SME loans, as well as specialist mortgages.