Analysts at Goodbody have claimed that RateSetter could help make Metro Bank an attractive target for an acquisition.
In September, Metro Bank completed its acquisition of the peer-to-peer lending platform RateSetter, for an initial consideration of £2.5m, with up to £9.5m to be paid out after the completion of the deal.
A report from Goodbody said that Metro Bank had built something unique and attractive despite its challenges and that perhaps a “buyer will emerge if it can show the RateSetter platform is working.”
“I’m not saying it is likely but Metro Bank has a good opportunity to grow its presence in the unsecured lending market with the RateSetter platform,” said John Cronin, financial analyst, investment banking at Goodbody.
“That would potentially be attractive. However, I think what would be more attractive is the appeal of (some of) the store footprint and the distinctive service proposition. RateSetter is just a neat add-on that should help it grow in a high-yielding lending segment.”
Neil Faulkner, managing director at P2P analyst 4th Way, said that Metro Bank could be attractive to acquirers, with RateSetter’s technology and people, but any banks looking to purchase it would have to be wary.
“Metro Bank, with £20bn in assets, is a potential target for a larger bank, but any bank looking to acquire Metro Bank is going to have to be very vigilant in order to ensure it spots any potential skeletons in the cupboard or anything that’s been swept under the carpet, because it hasn’t always got things right so far,” he said.
“Metro Bank has also lost money most years, and has made an overall loss since it launched in 2010 in the region of £300m. While that cost has been borne by previous and existing investors, it shows that there’s a lot to do to make it profitable, especially with Metro Bank’s expensive network of 77 branches.
“An acquirer might look to retain as many of Metro Bank’s customers as possible, while closing as many branches as it can get away with. RateSetter’s technology and people would certainly be an efficient way for another bank to expand its lending too.”