Carlyle Could Take Metro Bank Private

The likelihood of rising interest rates in the U.K. could be the motivation for private equity firm Carlyle’s potential takeover bid of Metro Bank, according to a Financial Times report on Thursday (Nov. 4).

Metro Bank “has engaged with Carlyle” on talks about the takeover, the FT report says, although bank officials didn’t say how much Carlyle might pay if its bid is successful. U.K. takeover rules dictate that Carlyle has until Dec. 2 to bid on Metro Bank or walk away from the discussions. It’s unclear which way the talks will go and whether Carlyle will make a bid, according to the report.

Metro Bank went public in 2016 and was embroiled in a loan misreporting scandal two years ago, which led to the ousting of the chairman of the bank’s board of directors and chief executive. The company’s market capitalization has dropped from about £3.5 billion ($4.72 billion) at its peak in March 2018 to less than £200 million (about $270 million) before news of Carlyle’s potential interest began to spread on Thursday.

Dan Frumkin, Metro’s chief executive, has worked to end the bank’s reliance on fixed-term savings accounts and low-risk mortgages, instead focusing on home loans and business debt in an effort to create higher returns.

Frumkin was a senior executive at the Bermuda-headquartered Butterfield bank when Carlyle owned the company from 2010 and 2016. He has been pushing to take Metro Bank private since he took the helm, according to the FT report, noting that it would make it easier to turn the company around in private.

Metro Bank’s push to build branches in the era of increased digital banking has scared off potential buyers, even when the bank’s value plummeted, per the report.

Related news: Metro Bank Debuts On-the-Go Invoicing

In April, Metro Bank introduced invoicing technology that allows business customers to create and manage invoices on the bank’s mobile app. Customers can see the payment status of invoices, reconcile invoices with payments and include their company logos on their invoices, among other tasks.

Metro Bank has focused on enhancing its digital offerings for a year or so, partnering with Clear Books on an accounting software solution for SMBs, including online and mobile bank feeds and financial management tools.