Metro Bank is early-stage talks to buy a peer-to-peer lender, aiming to grow in unsecured lending as the troubled British company’s mortgage business comes under pressure.
The London-based bank said Monday that it may acquire Retail Money Market, which owns the RateSetter platform. Sky News earlier reported the talks and said RateSetter was considering selling itself due to a coronavirus-related funding squeeze.
Metro Bank has replaced its management team after a tumultuous couple of years. Launched a decade ago by U.S. entrepreneur Vernon Hill, it sought deposits by becoming the first new brick-and-mortar British banking chain in a century. After revealing that incorrectly calculated risk weighting for some of its real estate loans, the stock has tumbled 90% since January 2019.
RateSetter was launched a decade ago as one of the first U.K. peer-to-peer lending companies and employs more than 200 people in London and Leicester, England. It offers depositors better interest rates than ordinary savings accounts, and turns that funding into loans to small businesses. It says 84,000 investors have invested 3.6 billion pounds ($2.9 billion) through the platform.
Metro Bank’s chief executive since its inception, Craig Donaldson, left the business at the end of last year and was replaced by Dan Frumkin. Months earlier, Hill said he would step down as chairman.