A HIGH street bank with three million customers has issued a major update for anyone with a loan.
Metro Bank has agreed the sale of its £584million portfolio of personal loans.
The high street bank said the sale of the unsecured loans will result in a gain of about £11million.
The loans sold have an typical interest rate of 5.3% and an average remaining fixed-term period of around 2.4 years, according to the bank.
This decision is part of Metro Bank’s ongoing shift away from retail lending, as it focuses its strategy on commercial, corporate, small business lending, and specialist mortgages.
The bank has ceased offering unsecured personal loans to new customers back in 2023.
Daniel Frumkin, chief executive of Metro Bank, said: “The sale of our unsecured personal loan book is in line with our strategy and positions Metro Bank strongly for future growth.
“Upon completion, the transaction is capital accretive and will allow us to further optimise our balance sheet as we strengthen our position as a specialist lender of choice.”
The bank assured affected customers that no action is required on their part.
James Daley, managing director of Fairer Finance, said: “Metro Bank customers needn’t be alarmed by this deal.
“The new owner of their loan won’t be able to change the terms, and interest rates on personal loans are usually fixed for the life of the loan.
“So repayments should just carry on as usual for customers – and you may get to the end of the agreement without noticing anything has changed.”
What does this mean for me?
The buyer of Metro Bank’s loan book has not been disclosed.
However the loans will continue to be serviced by Metro Bank, despite the debt being owned by another company.
This means that if you still have an outstanding balance on your Metro Bank personal loan, you can continue making repayments as usual – there is no time limit for repaying the debt.
You will not be required to settle the debt in full immediately.
Once your balance has been fully repaid and reaches £0, your account will be closed, and you will receive written confirmation.
Metro Bank has confirmed that any correspondence regarding the loan will continue to be from the bank.
Loan repayments are typically be debited automatically from your Metro Bank current account.
However, if you close your Metro Bank current account, you must contact the bank to arrange alternative payment methods.
You can do this by calling 0345 241 3075.
The announcement of its loan book sale comes ahead of the bank’s full-year results, which are set to be released tomorrow.
What is a personal loan?
A PERSONAL unsecured loan is a type of borrowing where you receive a lump sum from a lender and agree to repay it in instalments, along with interest.
Unlike secured loans, it doesn’t require any collateral, such as a house or car.
Approval is based on your creditworthiness, income, and existing debts, making it a riskier option for lenders and potentially more expensive for borrowers.
Despite this, personal loans can be cheaper than credit cards and overdrafts, but it’s not always guaranteed.
While personal loans often have lower interest rates, especially if you have a good credit score, the overall cost depends on several factors like the loan term, fees, and your individual circumstances.
Credit cards and overdrafts can be more expensive due to high interest rates and fees, especially if you only make minimum payments or exceed your overdraft limit.
It’s essential to compare the total cost of borrowing, including all fees and interest, before making a decision.
What’s been happening at Metro Bank?
Metro Bank has about three million customers in the UK and earlier this year announced a round of heavy cost-cutting which saw it axe 1,000 jobs.
In recent months, the bank has discontinued several of its retail lending products, including its personal loans.
In September, it also ceased offeringcredit cards to retail customers, although business credit cards and all overdraft products remain available.
Last year, Metro Bank shortened the operating hours of its high street branches, ending its seven-day-a-week service.
However, in response to customer feedback, the bank extended its branch operating hours starting February 1.
These changes are part of a wider strategy to save £80million by the end of 2024 as the bank continues its turnaround efforts.
Metro Bank has been working to strengthen its position following a £925million funding package approved by shareholders in late 2023, aimed at securing its future on Britain’s high streets.
As part of the capital raise, Colombian billionaire Jaime Gilinski Bacal became the majority shareholder, acquiring a 53% stake in the bank.
Despite this, Metro Bank remains listed on the London Stock Exchange.
How to get free debt help
There are several groups which can help you with your problem debts for free.
- Citizens Advice– 0800 144 8848 (England) / 0800 702 2020 (Wales)
- StepChange– 0800138 1111
- National Debtline– 0808 808 4000
- Debt Advice Foundation– 0800 043 4050
You can also find information about Debt Management Plans (DMP) and Individual Voluntary Agreements (IVA) by visiting MoneyHelper.org.uk or Gov.UK.
Speak to one of these organisations – don’t be tempted to use a claims management firm.
They say they can write off lots of your debt in return for a large upfront fee.
But there are other options where you don’t need to pay.