The FTSE 100 has taken a significant hit after Metro Bank’s takeover talks were called off.


The FTSE 100 has taken a significant hit after Metro Bank’s takeover talks were called off.

METRO Bank’s stock has dropped more than 16% after a potential takeover by Carlyle Group fell through.

The New York-based firm approached Metro Bank earlier this month, with Metro Bank confirming it had received a 100% stake offer.

Metro Bank’s stock soared 30% on the news at the time, but the collapse of talks has dealt the company yet another setback.

Carlyle has not provided an explanation for the change in strategy, only stating that it had agreed with Metro Bank “to terminate discussions regarding a possible offer.”

Investors had hoped that the buyout would help Metro Bank, which has struggled in recent years, with its shares plunging from a high of just over £40 per share in March 2018 to just over 104p today.

The bank has been in particularly difficult since Vernon Hill, the bank’s founder, stepped down in 2019 due to a major accounting error.

Dan Frumkin, a restructuring expert who previously worked at Northern Rock and the Royal Bank of Scotland, has taken Mr Hill’s place.

Investors had hoped that Mr. Frumkin’s experience with corporate turnarounds would help the challenger bank recover, but it still has a long way to go.

Metro Bank debuted in 2010 as the first high-street bank to open in the United Kingdom in over a century.

Smaller challenger banks have seen a surge in popularity in the UK in recent years, but many have struggled to compete with large banks like Barclays and Lloyds.

Metro Bank attempted to differentiate itself by focusing on customer service and investing heavily in branches that were open seven days a week.

However, the bricks and mortar investment has proven to be a millstone around the company’s neck.

“It’s Metro’s real estate footprint that may have proved a cost that stuck in Carlyle’s craw,” Susannah Streeter, senior Investment and markets analyst at Hargreaves Landsown, said.

“At a time when footfall in once-bustling streets is struggling to recover, Metro has been locked into long leases in city centers, while other challenger banks have focused on apps and an online presence.”

“With other banking upstarts gaining market share, Carlyle may be tempted to look elsewhere, particularly at a time when banks are expected to increase their earnings due to rising interest rates.”

“Brinkwire News in Condensed Form.”


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