Hogan Lovells and Pinsent Masons are advising on the sale of Metro Bank’s portfolio of prime residential mortgages to NatWest Group for up to £2.4bn in cash.

A Hogan Lovells team led by senior London M&A partner John Allison and financial services partner James Black acted for Metro Bank on the deal, while Pinsents advised NatWest.

The deal is the latest in a string of consolidations this year in the UK’s crowded banking market, including NatWest’s acquisition of UK retailer Sainsbury’s banking business in June, in a deal that saw A&O Shearman and Linklaters called in to advise the respective parties. 

The sale will provide a much-needed cash injection for Metro Bank, which was founded in 2010 to challenge the dominance of Britain’s high street banks but struck a £925m rescue deal last November following a string of setbacks including accounting errors and leadership departures, Reuters reported. 

The Hogan Lovells team advising Metro Bank on the matter also included client relationship partner Dan Simons, Charles Jemmett (M&A, counsel), Blaise Salle (M&A, associate), Julie Patient (financial services, counsel), Dan Park (financial services, associate), partner Angus Coulter (competition), Juliette Parkinson (competition, associate), partner Stefan Martin (employment), Anvita Sharma (employment, counsel), Alex Rutherford (privacy and cyber security, senior associate) and Tom Eyre-Brook (tax, counsel).

Meantime the Metro Bank legal team was led by general counsel Stephanie Wallace and senior legal counsel Oliver Storey.

Metro Bank said the sale was in line with its strategy to reposition its balance sheet and enhance risk-adjusted returns on capital. 

“The transaction is earnings, NIM and capital ratio accretive, and the sale creates additional lending capacity to enable Metro Bank to continue its asset rotation towards higher yielding commercial, corporate, SME lending and specialist mortgages,” the bank said in a statement. 

However, it added the mortgage portfolio had been originated when interest rates were lower and it would realise a roughly £105m loss upon completion of the sale. 

The deal will bring NatWest around 10,000 customer accounts. 

NatWest Group chief executive Paul Thwaite said the deal was a “further opportunity to accelerate the growth of our retail mortgage book within our existing risk appetite, with attractive returns”.

Other recent UK banking deals include Nationwide Building Society’s £2.9bn acquisition of Virgin Money, with Slaughter and May and Clifford Chance advising, and Coventry Building Society’s £780m purchase of The Co-operative Bank, shepherded by Addleshaw Goddard and Freshfields Bruckhaus Deringer. 

Earlier this year a Hogan Lovells team that again included Allison also advised Barclays on its £600m acquisition of most of Tesco’s banking operations. Freshfields acted for Tesco on the sale.