Asset finance lender Metro Bank has been sounding out its rivals – Lloyds Banking Group, NatWest and HSBC – about buying a third of its mortgage book to help bolster its balance sheet, Sky News reported yesterday.

The news comes as Metro’s chair met financial watchdogs following news of a plan to raise up to £600mn from investors through equity and debt funding.

Shares in the challenger bank fell almost 30 per cent on Thursday when news of the funding plan was made public.

Metro has 76 branches, 2.8 million customers and assets of £21.7bn.

An unnamed analyst talking to the FT described Metro’s equity raise as “horrifically dilutive” for shareholders and that securing more funding from existing investors could create “its own problem in the wider public sphere in terms of messaging”.

In 2019, Metro was at the centre of an accounting scandal when it underreported the risk of its loan book.

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This month’s latest issues prompted rating agency Morningstar to say it was unlikely Metro Bank’s troubles would be replicated across the UK finance sector given its relative size and the specific issues it was experiencing.

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