Metro Bank at nine-month high after Natwest mortgage sell-off

METRO BANK shares soared to their highest level since March yesterday on the back of it selling a mortgage book to Natwest.

The challenger bank, founded in 2010 as the first new high street bank in the UK for more than 150 years, announced an agreement after the market closed on Friday to sell £3.1bn of mortgages – roughly 20pc of its loan book – to larger rival Natwest.

The sale lifted Metro Bank’s capital level above a key regulatory minimum, optimising its balance sheet and freeing up cash to pursue more unsecured lending.

Investors cheered the deal and pushed the bank’s stock up as much as 30pc in early trading. By close, it had gained 23pc, or 26.5p to 141.3p, its highest level since the beginning of the pandemic in Britain.

The FTSE 100 bank Natwest, meanwhile, shed 3.9p to 153.45p.

The cheer did not extend to wider markets, where sentiment was dire over tougher restrictions being brought in, the discovery of a mutant strain of the virus and European countries barring the entry of UK citizens.

London’s equity markets fell into the red, with coronavirus concerns pushed once more into the forefront of traders’ minds. The FTSE 100 closed 112.86 points lower at 6,416.32. Just 12 out of its 101 constituents rose in price. Online grocer Ocado and Just Eat Takeaway.com rose as typical lockdown winners, by 123p to £23.32 and 150p to £81.20 respectively.

Airline, travel and retail stocks took the largest hits, as the sectors most affected by supply chain concerns and travel bans. British Airways owner IAG sold off the most, slumping by 12.45p to 143.90p.

It was followed by oil giants Royal Dutch Shell, which shed 76p to £12.65, and BP, which lost 13.3p to 258.05p.

“The underlying oil market has been hard hit by the fear surrounding the health crisis but keep in mind the commodity hit a nine-month high on Friday, so traders were all too happy to use the health crisis as an excuse to book profit,” said David Madden, market analyst for CMC Markets UK.

Meanwhile, Shell issued a trading update, saying it expects to slash the value of its oil and gas assets by up to $4.5bn (£3.3bn) as its domestic energy tumbles into the red after a bruising year due to the pandemic and a shift towards renewable energy.

Separately, Spire Healthcare – the UK’S second-largest provider of private healthcare – gained 12.2p to 145p after it announced it had signed a contract with the NHS to provide a volume-based commitment to reduce waiting lists when its existing contract ends at the close of the year.