Metro Bank Regulatory News (MTRO)

2 February 2021

Metro Bank PLC

Legal Entity Identifier: 213800X5WU57YL9GPK89

Acquisition of RateSetter back book

Accelerates strategic objective to enhance risk adjusted returns

In line with its strategy of increasing its exposure to unsecured personal lending, Metro Bank PLC ("Metro Bank" or "the Company") today announces the acquisition of a portfolio of loans (the "Portfolio") from peer-to-peer investors who have invested through the Retail Money Market Ltd ("RateSetter") platform for a cash consideration of up to £384 million (the "Acquisition"). The exact amount is expected to be less as the Portfolio will continue to amortise between announcement and expected completion in April 2021, following a two month notice period for retail investors.

The Portfolio had an aggregate book value of £384 million as at 29 January 2021, with an average total gross yield of circa 8%. The Portfolio consists primarily of unsecured consumer loans and is amortising rapidly, with an average weighted loan term of 2 years remaining. It is a well-seasoned portfolio delivering a consistent credit performance.

The Portfolio is being acquired at par value. As announced on 18 December, the Company's pro forma CET1 ratio was circa 16.3% and pro forma total capital plus MREL ratio was circa 24.2% as at 30 September 2020. On completion, the Acquisition is expected to reduce the 30 September 2020 pro forma CET1 ratio by circa 0.6% and the pro forma total capital plus MREL ratio by circa 0.9%.

Commenting on the acquisition, Daniel Frumkin, Metro Bank's Chief Executive Officer said: "The addition of this portfolio to our loan book is a further step towards growing our presence in the unsecured lending market. It builds on our acquisition of the RateSetter platform - a well-established business with a strong technology platform that is enabling us to rapidly expand our unsecured lending offering. We continue to deliver against Metro Bank's strategic priority of optimising our balance sheet and asset mix, whilst positioning ourselves to better serve customer needs as the UK's best community bank."

The Portfolio is currently owned by a large number of retail investors through the RateSetter platform. Under the terms of the loan agreements, an agent acts as custodian of the loans on behalf of the lenders (the "Agent"). The Agent is RateSetter, which is a wholly owned subsidiary of Metro Bank, and, as such, is a related party in accordance with LR 11.1.4R (2). Due to the size of the Acquisition it will constitute a 'smaller related party transaction' falling within LR 11.1.10R. Accordingly, Metro Bank has obtained written confirmation from a sponsor that the terms of the Acquisition are fair and reasonable as far as Metro Bank's shareholders are concerned.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 and was authorised for release by David Arden, Chief Financial Officer.

ENDS

Enquiries

For further information on this announcement, please contact:

Investor Relations

Jo Roberts

+44 (0) 20 3402 8900

ir@metrobank.plc.uk

Media Relations

Tina Coates / Abigail Whittaker

+44 (0) 7811 246016 / +44 (0) 7989 876136

pressoffice@metrobank.plc.uk

Teneo

Charles Armitstead / Haya Herbert‐Burns

+44 (0) 7703 330269 / +44 (0) 7342 031051

metrobank@teneo.com

About Metro Bank

Metro Bank serves more than two million customer accounts and is celebrated for its exceptional customer experience. It is the highest rated high street bank for overall service quality, in store service, and online and mobile banking services for personal customers in the Competition and Market Authority's Service Quality Survey in August 2020; the bank also ranked in the top two for overall service, store service and digital services for business customers. It was recognised as 'Bank of the Year' at the 2020 MoneyAge Awards.

The community bank offers retail, business, commercial and private banking services, and prides itself on giving customers the choice to bank however, whenever and wherever they choose, and supporting the customers and communities it serves. Whether that's through its network of 77 stores open seven days a week, early until late, 362 days a year; on the phone through its UK-based 24/7 contact centres; or online through its internet banking or award-winning mobile app: the bank offers customers real choice.

Metro Bank PLC. Registered in England and Wales. Company number: 6419578. Registered office: One Southampton Row, London, WC1B 5HA. 'Metrobank' is the registered trademark of Metro Bank PLC.

It is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. Most relevant deposits are protected by the Financial Services Compensation Scheme. For further information about the Scheme refer to the FSCS website www.fscs.org.uk.

All Metro Bank products are subject to status and approval.

Metro Bank PLC is an independent UK bank - it is not affiliated with any other bank or organisation (including the METRO newspaper or its publishers) anywhere in the world. Please refer to Metro Bank using the full name.