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Metro Bank is currently in discussions with investment firm Pollen Street Capital regarding a possible acquisition that may lead to the UK high street bank being privatized after a challenging time in the stock market.
The London-based private equity firm, which specializes in financial services, has made an informal overture to Metro Bank in recent weeks, as per sources familiar with the situation. They noted that negotiations are still at a preliminary phase and no agreement is guaranteed.
With a market valuation around £750 million, Metro Bank has been perceived as vulnerable to a takeover following its difficult tenure as a publicly traded entity. Such a transaction would mark another setback for London’s stock market, following 30 bids exceeding £100 million for UK-listed firms this year.
Metro Bank, which opened its main branch in 2010 and entered the London market in 2016 valued at £1.6 billion, was the first new high street bank in the UK in a century, but has encountered several regulatory challenges.
The most significant issue arose in 2019 when Metro Bank acknowledged that it had inaccurately categorized certain commercial loans, resulting in inadequate capital reserves. This led the bank to prepare a £350 million share offering, prompting investigations by the Financial Conduct Authority and the Prudential Regulation Authority.
The bank had to secure emergency funding in 2023 after its stock plummeted more than 50% when it revealed that a proposed modification to capital requirements for its mortgage portfolio had not received regulatory approval.
Colombian billionaire Jaime Gilinski Bacal, who became the majority owner of Metro Bank through the recent fundraising, joined the bank’s board in January of last year.
Pollen Street’s interest in Metro Bank highlights the challenges faced by challenger banks in the UK financial landscape. Nationwide Building Society completed its £2.9 billion acquisition of Virgin Money last year, while Shawbrook, another investment by Pollen Street, is reportedly considering a partnership with Starling Bank.
If Pollen Street proceeds with an acquisition, it could pave the way for a merger between Metro Bank and Shawbrook, especially since Metro declined a bid from Shawbrook in 2023 while seeking emergency financing.
Recently, Metro Bank has shifted its focus from retail banking to specialized lending for businesses and small to medium enterprises (SMEs). Although its stock has tripled since reaching a low point during restructuring, it remains well below the heights it achieved in 2019.
Sky News had previously reported on this interest. Neither Metro Bank nor Pollen Street has commented on the matter.
