NatWest has agreed to buy a £2.5 billion portfolio of prime residential mortgages from Metro Bank.
The deal will see around 10,000 customer accounts transfer to NatWest from Metro, although the accounts will continue to be serviced by the latter lender.
NatWest says the mortgages have a weighted average current loan-to-value of around 62%, and expects the deal to be completed in the second half of this year, subject to regulatory approval.
The sale by Metro comes after it had pulled a prospective £3 billion mortgage portfolio sale in December, citing “the prevailing market environment”.
Natwest has acquired £2.5 billion of gross customer assets, comprising £1.4 billion of unsecured personal loans and £1.1 billion of credit card balances, together with around £2.6bn of customer deposits.
The move did not include an exchange of home loans. This is because the supermarket had previously sold off its mortgage book, valued at £479 millio and made up of around 3,500 home loans, to the Co-operative Bank for around £464 million in cash last August.
In 2020, NatWest previously bought a £3 billion portfolio of prime UK mortgages from Metro, which transferred 13,000 customers to the larger high street bank.
Paul Thwaite, CEO of NatWest Group said “This transaction is a further opportunity to accelerate the growth of our Retail mortgage book within our existing risk appetite, with attractive returns. It is in line with our strategic priorities and builds on our recent acquisition from Sainsbury’s Bank.”
Metro Bank boss Daniel Frumkin said “The sale of part of our residential mortgage portfolio is earnings, NIM and capital ratio accretive. The sale is in-line with Metro Bank’s strategy to reposition its balance sheet for higher risk adjusted returns on regulatory capital. The additional lending capacity provided by this sale will enable us to continue our shift into high yielding assets in niche and underserved markets and become a specialist lender of choice.”
