Pollen Street Capital made an informal approach to the bank in recent weeks, the Financial Times (FT) reported Saturday (June 14), citing sources familiar with the matter.
PYMNTS has contacted Metro Bank for comment but has not yet gotten a reply.
The FT noted that Metro, valued at a little more than $1 billion, has been considered ripe for a possible takeover following a rocky tenure as a publicly traded company. Such a deal, the report added, would mark another blow to the London market, as this year has already seen 30 bids of more than £100 million for U.K.-listed companies.
The report also pointed out that Metro has experienced several regulatory issues, the most serious of which happened in 2019. That was the year the bank admitted it had misclassified numerous commercial loans, meaning it did not have enough capital. Metro prepared a £350 million share issue and both the Financial Conduct Authority (FCA) and the Prudential Regulation Authority initiated an investigation.
And in 2023, Metro Bank was forced to raise emergency capital when its shares dropped more than 50% upon acknowledging that regulators had not signed off on a change to capital requirements on its mortgage book.
The FCA also fined Metro £16.7 million last October for a lack of proper money-laundering safeguards on 60 million transactions between 2016 and 2020. As PYMNTS noted at the time, it was a tumultuous season for Metro and other banks like it.
“A wave of funding rounds over the past several months is giving challenger banks fresh financial firepower to position themselves as alternatives to traditional banks, mainstays of financial services that have been around for decades — even centuries,” that report said.
“While these digitally focused challengers promise to bring financial services and products to just about anyone who wields a mobile device, they may face challenges of their own.”
Investors, that report said, were banking on these up-and-coming lenders to take some share away from traditional institutions that had long ruled the financial services space. Lacking brick-and-mortar locations that are the trademarks of those established players, the competition comes down to rates offered on checking and savings accounts, PYMNTS wrote.
“There are some indications, however, that challengers are still fine-tuning at least some aspects of their business models as growth remains heady,” the report added.
“Fraud and anti-money laundering concerns are inviting increased regulatory scrutiny, especially in the U.K.”
