(Bloomberg) — Metro Bank Holdings Plc Chief Executive Officer Daniel Frumkin indicated that Barclays Plc is among the possible buyers of a £3 billion ($3.7 billion) mortgage portfolio the struggling lender put up for sale as it attempts to strengthen its balance sheet.
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Answering a question from Barclays analyst Aman Rakkar about the sale of part of Metro Bank’s home lending book, Frumkin said the process had already attracted significant interest from potential suitors including one not “dissimilar to what’s on your paycheck.”
Barclays declined to comment.
London-headquartered Metro Bank is hoping to complete the sale of the mortgages by the end of the year, Frumkin said on a call with analysts and investors on Monday to discuss the capital restructuring secured late Sunday.
NatWest Group Plc, which bought another Metro Bank mortgage book in 2020, and Lloyds Banking Group Plc are reported to have also shown interest in this sale.
Frumkin declined to give an expected price, though he told analysts their estimates of the likely discount were too high. “I think if you cut the 5% in half you might be sneaking up on it,” he said.
He added that he’d be fine if a deal could not be agreed. “If we don’t sell it, I don’t really care, we’ll just let it run off,” said Frumkin. “It doesn’t really matter to me, it’s just the pace at which we can reposition the balance sheet is attractive because we’d like to crack on with it.”
The longer term future of Metro’s mortgage business depends on whether it can convince the Bank of England to allow it to apply its own internally-generated risk weightings on loans. Frumkin said the lender was waiting for written feedback from its regulators on that process, cautioning that if officials would not allow it to hold a lower capital level against its mortgages, then Metro Bank would consider getting out of that business altogether.
“If we’re not chasing a really good savings on our residential mortgage book then I don’t know why we’d do it,” he said.
–With assistance from Jan-Henrik Förster.
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Source: finance.yahoo.com