Home Business Metro Bank share price plunges as it enters exclusive talks with RateSetter

Metro Bank share price plunges as it enters exclusive talks with RateSetter

The talks, first reported by Sky News late on Sunday, are at an early stage, the bank has said in response to media speculation. The move would push challenger bank Metro further into unsecured consumer lending.

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Metro Bank’s share price had plunged nearly six percent in early trading. It is now hovering 5.6 percent below its opening price.

Metro is one of the banks that was set up in the wake of the 2008 financial crisis to challenge heavyweights such as RBS and Barclays.

It was hit hard by an accounting scandal last year, which sent its share price tumbling, wiping around 90 percent of its market value.

It was a tough 12 months for the bank as the misreporting scandal went hand in hand with criticism of its governance.

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Metro and RateSetter confirmed talks. (Image: Getty)

Metro lost £130m last year so the deal could be seen as crucial to its recovery. (Image: Getty)

Metro lost £130m last year so the deal could be seen as crucial to its recovery.

Its business practices are still under the microscope.

A statement released by the company said: “The company regularly assesses various opportunities in the market.

“There can be no certainty at this stage that a formal agreement will be reached, nor as to the terms of any agreement. A further announcement will be made if and when appropriate.”

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Coronavirus has sent many stocks into a tailspin. (Image: Getty)

CEO Dan Frumkin, who has been tasked with the bank’s turnaround, seems to be mulling strengthening its lending facilities.

Reuters reported that the growth of peer-to-peer lending firms have grown steadily since 2005.

These match lenders with borrowers via online platforms, and manage more than £5.3billion, independent research data has shown.

John Cronin, an analyst at Goodbody, told the Financial Times the merger could have “compelling industrial logic”, depending on the price demanded by Ratesetter’s board. The move would provide a “ready-made platform through which [Metro] could drive potentially quite profitable growth”.

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Sources told Sky News that if talks progress, the transaction could go through next month. (Image: Getty)

RateSetter is one of the largest lenders of its kind, known for introducing a peer-to-peer lending facility known as a “provision fund”.

Sources told Sky News on Sunday that if talks progress successfully, the transaction could go through as early as next month.

Rumours have been circulating since April that RateSetter would opt for a merger.

If the deal completes, it would mark the first time a high street bank in Britain has acquired a peer-to-peer lender.

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