US private equity swoops on Metro Bank

PRIVATE equity sharks have now set their sights on Britain’s banking sector, as Metro Bank found itself in the crosshairs of a US buyout giant.

The challenger bank confirmed yesterday that Carlyle had approached it, though no formal offer has yet been received.

A takeover of Metro by the American giant would see yet another company disappear from the stock market and fall into the hands of a profit-hungry private equity firm based overseas.

Businesses ranging from Morrisons to defence firm Ultra Electronics have already been snapped up this year, in what critics have labelled a ‘plundering’ of UK plc.

Metro said yesterday it had ‘engaged with Carlyle’ and would make a further announcement ‘as and when appropriate’. The statement did not reveal how much the Washington DC-based firm was willing to put on the table. But Carlyle, headed by 72-year-old US billionaire David Rubenstein, now has until December 2 to make a formal offer or walk away.

Metro Bank, known for its flashy branches and neon lighting, became the first new bank in a century to open branches in the UK when it was founded in 2010 by Vernon Hill, another US billionaire who counted former US president Donald Trump as a golfing buddy.

Hill (pictured) stepped up from vicechairman to chairman of Metro in 2013 – but his position became untenable following a string of scandals. In 2018, he raised eyebrows after paying almost £25m of the bank’s money to his wife’s architecture firm. And in 2019, an embarrassing accounting gaffe left the lender floundering. It had to scramble to raise more cash, and ended up having to pay investors an eye-watering yield of 9.5pc when it issued bonds in late 2019. Chief executive Daniel Frumkin has been trying to turn the bank around since he took the role in 2020.

Earlier this year he said his efforts were ‘beginning to bear fruit’, as the bank reported a sharp reduction in losses for the first half of 2021. But it is understood that he had been interested in taking Metro private since he became boss.

He already has a relationship with Carlyle. Before joining Metro, he held senior executive roles at Bermuda-based lender Butterfield which was owned by Carlyle between 2010 and 2016.

Shares jumped 19.1pc or 30p to 133p as investors banked on a bid from Carlyle.