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Title: Metro Bank in Talks to Sell Mortgage Book as Stock Plunges
Word Count: 309
Metro Bank, a UK-based retail bank, is currently in discussions to sell a significant portion, around a third, of its mortgage book in an effort to strengthen its balance sheet. The move comes after the bank’s stock was downgraded by both ratings agencies and investment banks.
Shares in Metro Bank experienced a sharp decline of over 29%, causing a temporary suspension in trading. As a result, the company is now seeking to secure approximately £250 million ($305 million) in equity funding, along with £350 million of debt to bolster its financial position.
Rival banking institutions, such as HSBC, Lloyds Banking Group, and NatWest Group, have reportedly been approached to consider buying a substantial £3 billion chunk of Metro Bank’s mortgage portfolio.
However, industry analysts have expressed skepticism about the bank’s prospects for raising capital successfully. Stifel, an investment banking company, downgraded Metro Bank’s stock from “hold” to “sell,” highlighting the lack of apparent easy solutions for the bank and potential risks to its bonds. Similarly, Barclays Bank also downgraded the stock to underweight.
The bank’s deteriorating condition has caught the attention of credit rating agency Fitch Ratings, prompting them to place Metro Bank on “ratings watch negative.” The agency cited concerns regarding short-term risks to the bank’s business model stabilization, capital buffers, and funding.
Metro Bank’s plan to offload a significant portion of its mortgage book aims to strengthen its financial position amidst mounting challenges. By reducing its mortgage exposure, the bank hopes to improve its balance sheet and shore up investor confidence.
This move comes as part of the bank’s efforts to address ongoing financial headwinds and regain stability. Only time will tell if Metro Bank can successfully navigate these obstacles and restore confidence in its operations.
