Bank founder under pressure over loan portfolio move

Pressure is mounting on Metro Bank founder and chairman Vernon Hill after an admission today that the bank is considering selling a loan portfolio.

In an update to the stock exchange the bank, which in April this year announced plans to open new branches in Manchester and Liverpool, said it noted recent press speculation regarding a potential disposal of a loan portfolio.

It said: “The company regularly assesses various opportunities in the market and accordingly confirms that discussions regarding the potential sale of a loan portfolio are taking place.

“There can be no certainty at this stage that an agreement will be reached. A further announcement will be made if and when appropriate.”

Russ Mould, investment director at Manchester investment firm AJ Bell, said: “After an aggressive growth spree which saw Metro Bank set up shop on high streets across the UK, the bank is now in retreat.

“Just over a year ago it bought £523m worth of mortgage loans from Cerberus; it has now confirmed speculation that it is selling some loans, thought to be involving a deal with the same party.

“This is the latest sign of a company desperate to get itself back on track by injecting more capital into the business to put it on a stronger footing.”

He added: “Vernon Hill has previously talked about creating the first major high street bank in over 100 years in Britain from scratch.

“The journey turned chaotic last year and shareholders have seen significant value wiped off their investment in the bank.

“With a risk that all the negative publicity could hurt new customer acquisition numbers, not helped by the regulators investigating the bank over mis-categorising various loans, Mr Hill is, unsurprisingly, under considerable pressure to step down.

“Half year results due on 24 July are likely to include fighting talk from the chairman, who seems reluctant to walk away.”

In April the bank revealed that it was set to open its first branch in Manchester, and the first in the North West, with plans to launch 29 more stores in the North over the next five years creating 750 jobs and in excess of 100 apprenticeships.

It said branches are set to follow in Leeds, Sheffield, and Liverpool.

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