Metro Bank says the sale of a £521m buy-to-let loan book back to hedge fund Cerberus will result in a £1.8m loss.
The lender’s share price was down by around 14 per cent to 410.6p as at 1.40pm today, following a drop in profits and news that chairman and founder Vernon Hill is to step down from his role, but remain on the board.
In the bank’s half-year results published after markets closed yesterday it revealed that profits were down by 84 per cent from £20.8m in the first half of 2018 to just £3.4m for the six months to the end of June.
Metro raised £375m from shareholders in May after it revealed that it had under-stated the level of risk in its portfolio.
The bank previously acquired the £520m buy-to-let loan book from Cerberus in February 2018 and says the loans were always serviced by a third-party administrator.
The bank says: “An expected loss of £1.8m will be recognised in the Q3 2019 income statement reflecting the difference between the sale price and the carrying amount on the balance sheet.”
Metro chief executive Craig Donaldson says: “This has been a challenging first half for the bank, with deposit outflows following intense speculation at the time of our capital raise in May.
“Despite this, we have delivered a resilient performance with both personal and business current accounts growing alongside increased revenues and fee income, with deposit growth returning to normal in June and July to date.
“We described 2019 as a year of transition for Metro Bank and management has continued its focus on our strategic initiatives, upgrading our cost savings guidance to the upper end of our original range, investing in additional fee service offerings and rebalancing our lending mix.”