US private equity firm Carlyle Group has pulled out of talks to buy Metro Bank. 

In a statement to the stock exchange Carlyle has confirmed it had terminated discussions and no offer would be made for the troubled challenger bank. No reason was given for the collapse of these talks.

In its own statement the board of Metro Bank said it “continues to strongly believe in the standalone strategy and future prospects of Metro Bank.” However, shares in the company fell sharply on the back of Carlyle’s announcement. 

Metro Bank launched in 2010, claiming to be the first UK bank for 150 years. While many organisations were pursing internet and digital banking options it opted for a branch-based strategy, with a number of its retail-themed ‘stores’ in prime spots in major cities. 

While initially successful, the bank has been hit by the trend towards remote and digital banking options, which has accelerated in the wake of the pandemic. This has left Metro Bank paying high rents on the leases of many of its branches, at a time when footfall in city centre locations is down due to increased home working.

It was also hit by an accounting scandal in 2019, regarding the mis-reporting of loans, which resulted in the resignation of the both its chair and chief executive. 

Last year Metro Bank transferred 13,000 of its mortgages to NatWest, which confirmed yesterday that it will complete the legal title of transfer for these loans.

NatWest says it will introduce “a temporary product transfer journey until February 2022 before the digital solution will be available”.

The bank adds that among the key changes that follow from the transfer, are that brokers will need to source NatWest as the current lender for these customers and not Metro.