What's going on?

Metro Bank, one of the UK�s �challenger banks,� acquired a portfolio of mortgages from an investment firm in order to boost its lending business.

What does this mean?

Banks like Metro Bank, of course, make loans every day � including lots of mortgages. But loans can also be bought and sold, like a transferable �IOU�. Metro Bank is trying to grow quickly, which means it wants to make more loans. So, in order to boost its growth, it bought almost �600 million worth of loans from an investment fund. Now, instead of paying back the investment fund, said customers will technically pay back their mortgages to Metro Bank (in practice, the customers won�t notice a difference) � and Metro Bank has increased its book of loans in one fell swoop.

Why should I care?

For the stock: Metro Bank recently had its first profitable quarter.

The first quarter of this year was the first quarter in which Metro Bank turned a profit� ever! Until then, it had habitually increased its revenue since it was founded in 2010, but always reinvested the proceeds (and more) back into building the business. It�s now aiming to post a profit for the full year for the first time.


The bigger picture: �Challenger banks� are, well, challenging the UK�s big five.

British high street banking is dominated by Barclays, HSBC, RBS, Lloyds and Santander but it is increasingly being challenged by the likes of Metro Bank and Virgin Money. In fact, even the �challenger� banks are now facing competition from digital-focused entrants like Atom Bank and Monzo. The hope is that the increased competition will lead to better customer service and lower costs for both businesses and consumers.