Metro Bank shares crash as bidder Carlyle walks away

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Shares of ETRO Bank crashed 18% today after private equity firm Carlyle discovered its takeover of the troubled lender.

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Carlyle first disclosed bid talks with Metro earlier in the month and had until December 2 to make a firm bid. Today it decided to put an end to the talks.

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Metro responded by saying that the board “believes strongly in the standalone strategy”.

Rising interest rates should be good for all banks, but Metro has been plagued by problems, beginning with an accounting issue discovered in 2019 that misclassified some loans.

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The stock, which was once over 4000p, fell from 23p to 109p today.

Other bidders may come forward, but it’s not clear how attractive Metro is at this point in time.

Ian Gordon at Investec said: “We see the main obstacle to a viable transaction as Metro’s high fixed cost base, largely a function of expensive long leases across its network of 78 stores that are limited to Metro. Suggests strategic flexibility whether on a standalone basis, or in the hands of a third party acquirer.”

Founded in 2010, Metro made an initial splash in the market and pledged to open branches along with the closure of other banks.

Colors founder Vernon Hill stepped down as chairman after an accounting scandal.

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