Frances Ball 14 May 2019 09:49am

Metro Bank looks into sale of loans hit by accounting error

Metro Bank, one of the leading challenger banks in the UK, has drawn up plans to sell more than £1bn worth of loans

In January, Metro Bank revealed that it had miscalculated the risk weightings on parts of its loan book.

The bank announced at the time that the total of its risk weighted assets (RWAs) would need to increase by £900m, news which wiped £800m from the bank’s market value.

Despite the accounting error, the bank recently won funding worth £120m from the Banking Competition Remedies, in a bid to stimulate SME banking.

Even so, Metro Bank’s profits and deposits dropped by more than a third in the first quarter of 2019.

Speaking to the Financial Times, Metro Bank’s chief executive Craig Donaldson said that the bank had discussed the idea of selling loans with its investors.
However, he stressed that a final decision has not been reached.

The loans in question come to more than 10% of the bank’s total loan book, and involve both commercial property and buy-to-let loans.