Consulting firm Ernst & Young has been hired to find a buyer for the UK’s Metro Bank as early as today. Photograph: ShutterstockConsulting firm Ernst & Young has been hired to find a buyer for the UK’s Metro Bank as early as today as the challenger bank races to strengthen its balance sheet, according to people familiar with the matter.
JPMorgan Chase was among the lenders approached but has decided not to proceed, one of the people said. Metro was previously approached about a possible merger with fellow mid-tier bank Shawbrook, but those talks did not progress although Shawbrook remains interested in doing a deal, according to three people familiar with the matter.
The talks come weeks after the BOE’s Prudential Regulatory Authority informed Metro Bank that it had more work to do before it would be allowed to use a new, internal model for calculating risk-weighted assets that would likely boost the firm’s capital ratios. That left executives racing to figure out how to fill the impending hole on its balance sheet having sounded out existing investors in the summer about potential options for raising capital.
Metro Bank, which was cofounded by Vernon Hill, opened its doors in 2010 and is one of the most prominent British challenger banks that emerged to take on incumbents such as Barclays and Lloyds. While others focused on expanding their online banking offerings, the firm has become known for building a branch network, including in expensive locations like the King’s Road in Chelsea.