Metro Bank Restores Plan to Sell Mortgage Loans

British lender Metro Bank has revived its plan to sell residential mortgage loans valued at billions of pounds, following its rescue from potential collapse last year, Sky News reports.

Even though the size of the mortgage loan portfolio has not been finalized, reports indicated it could range between £3 billion and £4 billion.

The London-listed high street lender has also reportedly enlisted bankers from Morgan Stanley to work on a strategy to raise capital from the sale of the mortgages.

Banking analysts anticipate that Metro Bank will likely need to raise additional capital in the coming months, as its balance sheet faces increasing strain.

The revival of the process comes four months after Metro Bank announced it would cut 1,000 jobs and discontinue its seven-day branch opening model as part of efforts to tighten cost controls.

Last October, the bank secured a £925 million lifeline, involving approximately £150 million in new equity and £175 million in new debt, alongside refinancing £600 million in existing borrowings. The rescue package resulted in Colombian billionaire Jaime Gilinski Bacal becoming majority shareholder.

The sale occurred because Metro Bank needed to strengthen its balance sheet following the Bank of England’s denial of its request to use its own models to assess risks on its mortgages and assets.

Metro Bank had previously been in exclusive negotiations to sell a £3 billion mortgage portfolio to Barclays but ended the discussions after failing to reach an agreement on the asset’s price.