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Metro Bank Takes Step Towards £1bn Listing

Metro Bank Takes Step Towards £1bn Listing

The first high street lender to emerge from the rubble of the financial crisis has hired advisers to handle a flotation that will cement its status as one of the UK's most valuable financial start-ups of the last decade.

Sky News understands that Metro Bank has appointed Bank of America Merrill Lynch (BAML), Goldman Sachs and Royal Bank of Canada (RBC) to work on the initial public offering (IPO), which could take place as soon as the first quarter of next year.

Other advisers could be added as the listing of the UK's first new high street bank for more than a century draws nearer.

The appointments, which took place in the last few weeks, underline Metro Bank's determination to press ahead with a listing despite the threat of a future hit from the Treasury's new Corporation Tax surcharge, which will target lenders earning more than £25m in annual profits.

The flotation, which will target around £300m in fundraising proceeds, will crystallise substantial windfalls for the investors who backed the business prior to its launch, including Vernon Hill, the bank's American chairman.

Metro Bank now has more than 35 branches open, most of which are concentrated in London and the South East, and has continued to report strong customer and deposit growth despite ongoing losses.

The bank recently marked its fifth anniversary by announcing that it had more than 540,000 customer accounts, which it believes underlines the effectiveness of its service-oriented offering to customers.

Craig Donaldson, Metro Bank's chief executive, said in July: "Our second quarter results show record growth in lending, with total loans surpassing the £2bn mark.

"We're particularly proud to report that a significant amount of our lending goes towards supporting local businesses, while our mortgage lending has experienced significant demand."

Mr Donaldson is among a group of challenger bank bosses who met senior Treasury officials last month to protest at the Chancellor's announcement in his most recent Budget that banks and building societies would pay an 8% surcharge on profits of more than £25m.

Although Metro Bank remains loss-making, its forecasts suggest it is likely to make more than £25m in profit within a few years, meaning that it would fall within the tax's current parameters.

Investment banks which have worked on earlier private fundraisings included BAML and RBC, which put them in pole position for key roles on the deal.

Metro Bank has so far raised over £600m from investors, meaning that the revised total after a successful flotation could reach close to the mooted £1bn valuation of the business.

The company has a heavyweight board, with non-executive directors include Lord Flight, the former chief secretary to the Treasury.

Metro Bank and the investment banks declined to comment on the IPO preparations.