Metro Bank in talks to acquire UK P2P lender RateSetter

British challenger bank Metro is in exclusive talks to buy peer-to-peer lender RateSetter, though discussions are at an early stage, the bank said today in response to media speculation.

Metro Bank was one of the banks set up in the wake of the global financial crisis to challenge established names such as Barclays and Royal Bank of Scotland.

It was hit last year by a damaging accounting scandal which cost it its chairman and CEO and wiped 90% off its market value.

The bank said earlier this year it was cutting back growth plans after plunging into the red.

The acquisition would give the bank a new lending platform and fits in with its wider focus on developing lending technology, which saw it partner with ezbob in March to create a lending platform specifically for small and medium-sized enterprises (SMEs).

With a market capitalisation of barely £180 million, the bank has made a bold move to diversify at a time when the economy is still so uncertain.

RateSetter launched in 2010 and is chaired by Paul Manduca, the outgoing chairman of British insurance giant Prudential.

Peer-to-peer lending firms, which match lenders with borrowers via online platforms, have grown steadily in Britain since 2005, managing more than £5.3 billion in 2019, independent research firm 4thWay data shows.

However, several have struggled, with two firms – Lendy and Funding Secure – collapsing in recent years, prompting the Financial Conduct Authority to bring in tighter regulation.