Market report: Is Lloyds pondering a bid for Metro Bank?


MARKET ROUND-UP

IS LLOYDS lining up a bid for troubled Metro Bank? The City rumour machine reckons it might be, noting that such a deal would be welcomed by the regulator, said to be concerned by Metro Bank’s declining financial position.

The recent departure of chairman and founder Vernon Hill could clear the way for a rescue bid from Lloyds Banking Group, which yesterday reported a 97% plunge in third-quarter profits. It was biffed by set-asides for PPI and wider economic gloom that have seen its shares left in limbo. Today they were down 1p to 56p, which leaves the bank valued at £39.5 billion.

Metro Bank shares have crashed so spectacularly, off again by 1.6p to 201.2p, that it is worth just £346 million. This means Lloyds boss Antonio Horta-Osorio could buy it with the change in his back pocket were he minded. The man in the City wine bar with the chunky cufflinks reckons the deal could be done in the New Year. He’s been right before (and wrong before). A six out of 10 shot this time, he reckons.

Metro Bank recently raised a muchneeded £300 million from a bond that pays an extraordinary 9.5%. “Any company that has to pay near10% interest to raise funds is going to be vulnerable, especially if they are a bank,” says the thick-wristed Merlot man. City analysts think a Metro Bank takeover by Lloyds makes sense for at least two reasons. First, Metro Bank’s funding costs are so high that writing new mortgage business isn’t profitable, so it needs a stronger partner to grow. Second, it’s a snip. “Metro is trading at less than a quarter of book value, so Lloyds gets to pick up the assets cheaply,” says a bank scribbler. “What would Lloyds do with the brand and branches? I suppose it could keep it separate, but if you are paying that little you can afford to keep what you want and chuck away the rest.” Neither Lloyds nor Metro Bank had any comment.

Enjoying the Brexit uncertainty was TP Icap. The interdealer broker reported a jump in trading over the summer which saw revenues rise 17% to £478 million. The shares were up 1.6p to 344.5p. On an otherwise quiet day for chatter, the FTSE 100 mostly trod water, up 25.16 to 7273.54. The FTSE 250 did the same, edging up 44.80

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