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Britain's mid-sized Metro Bank gets Carlyle bid approach

2 min read

(Reuters) – Metro Bank said it has received a takeover approach from U.S. private equity firm Carlyle, sending its battered shares by as much as 31% higher, in a sign of growing interest in Britain’s mid-sized banks.

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Metro Bank, which had a market capitalisation of 178 million pounds ($242 million) at Wednesday’s closing price, said it was engaging with Carlyle.

But it added in a statement there was no certainty an offer would be made and advised its shareholders to take no action.

Shares in Metro Bank, which have slumped around 57% since February 2020 as they and other mid-sized lenders struggled with low interest rates and competition, were up 29% at 1125 GMT and heading for their best ever one-day performance.

Metro Bank has been working to turn around its fortunes after a major accounting error in 2019 forced out its top bosses and led to a significant share price fall.

Dealmaking involving British banking has picked up recently, with Co-operative Bank making an unsolicited offer for TSB, the British subsidiary of Sabadell. The Spanish bank rejected the bid for TSB last month.

Metro Bank, which was launched more than a decade ago to challenge Britain’s incumbent high street lenders, has struggled to generate profits from a growing deposit base.

But its losses narrowed in July as Britain’s economy recovered from the COVID-19 pandemic, which had left smaller banks more vulnerable compared with their larger and more diverse rivals as interest rates hit record lows.

“A further announcement will be made as and when appropriate,” Metro Bank said.

A spokesperson for Carlyle declined to comment.

($1 = 0.7368 pounds)

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