Shares in Metro Bank have increased by over 10% in early trading, following rumours of a potential takeover deal.

Sky News reported on Saturday that the London-listed bank has recently been approached by Pollen Street Capital in regards to an acquisition offer.

Pollen Street is one of the major shareholders in Shawbrook, which has made previous merger approaches to Metro Bank.

Metro Bank, which was founded in 2009 and operates 75 branches across the UK, was rescued through a £925m bailout deal in November 2023, which comprised £325m of equity and £600m of new debt.

Since the deal, the bank announced that it was to deliver £50m of annualised cost savings and also agreed to, as it looked to prioritise specialist lending.

Investment director at AJ Bell, Russ Mould, said that Metro Bank has "been on a rollercoaster of a journey" in recent years.

He stated: "Metro Bank has since repositioned itself as a business banking provider and investors have slowly regained confidence in the company. The shares have been on a big run over the past year, albeit only putting them back to a two-year high and still a fraction of 2018 highs.

"With the market now looking more favourably on the business, it’s no surprise to see takeover speculation as strategically, Metro Bank is in a much better place. What’s unknown is the price that a suitor such as Pollen Street would be prepared to pay, as the shares are not cheap versus earnings expectations for 2025. A suitor would need to take a longer-term view of Metro Bank’s potential to warrant paying a big premium to the current market price."

Metro Bank and Pollen Street Capital have both declined to comment.

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