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Metro Bank’s biggest City shareholder sells stake as private equity buyer walks away

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Metro Bank - Nick Ansell/PA Wire
Metro Bank - Nick Ansell/PA Wire

A leading institutional investor in Metro Bank two years ago has cashed in its stake as hopes fade that the stuggling lender might be bought out.

Legal & General, which in 2019 led a rebellion against the re-election of Metro Bank’s billionaire founder and former chairman Vernon Hill amid corporate governance concerns, was the bank’s biggest City shareholder but has now slipped out of its top 20 list.

It has sold down its stake in the bank twice in recent weeks, including the day before US private equity firm Carlyle said it was walking away from takeover talks with the bank, according to regulatory filings.

An L&G spokesman said it is “part of an ongoing wider reduction of a large basket of stocks across index funds” and not an active decision.

The move comes as the investment giant continues searching for a replacement for its former corporate governance chief Sacha Sadan, who spearheaded the shareholder backlash against Metro Bank in 2019 but left this year for City watchdog the Financial Conduct Authority.

Metro Bank’s shares soared by a third after it emerged earlier this month that Carlyle had its eye on the challenger bank, which is trying to revive its fortunes after an accounting scandal in 2019 caused an investor revolt and the eventual exit of its former chief executive and chairman.

There were hopes that an offer from Carlyle could trigger a long-awaited wave of consolidation in the challenger bank sector. However Metro Bank’s shares slid last week after Carlyle pulled out of talks, which were at an early stage. Since its stock market float in 2016, when the lender was valued at £1.6bn, shareholders have seen 95pc of their investment vanish.

Mr Hill, a former golfing buddy of Donald Trump, had a loyal set of backers in the US when he created the high-street bank, including billionaire Steven Cohen. However Mr Cohen, once the lender’s biggest backer, has also reduced his investment since the accounting scandal.

A Metro Bank spokesman said: “It is not appropriate for us to comment on the investment decisions of our shareholders.”

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