Metro Bank has announced an agreement to acquire peer-to-peer lender, RateSetter, for an initial £2.5m.

The deal includes a consideration of up to £0.5m which will be payable 12 months after completion, subject to the satisfaction of certain criteria, and a further consideration of up to £9m to be payable on the third anniversary.

Metro Bank stated that the acquisition does not include RateSetter’s holding in RateSetter Australia, which is being retained by RateSetter shareholders.

As part of its strategy to enhance returns, Metro Bank indicated it had previously signalled an ambition to grow unsecured lending, and suggested that RateSetter’s originating and underwriting capability will enable the bank to rapidly accelerate this ambition via an existing, scalable platform.

RateSetter, founded in 2010, has more than 750,000 people that have invested or borrowed through the platform, and the business has originated £4bn of lending since its inception.

Metro Bank CEO, Daniel Frumkin, commented: “The ability to enhance our offer of unsecured lending to our customers is an important strategic ambition as we continue to evolve the Bank and increase our returns.

“RateSetter is an established business with a strong technology platform and a talented team who have deep experience in the consumer unsecured lending market. This acquisition therefore accelerates our plans, helps us to better meet the needs of our customers and further strengthens our position as the UK's best community bank.”

Metro Bank all revealed that it will operate RateSetter as an independent platform and originate loans under both the RateSetter and Metro Bank brands.

“I am excited at the prospects of this combination,” RateSetter CEO, Rhydian Lewis, added. “RateSetter and Metro Bank share a focus on delivering something better for the customer and the strategic logic of pairing Metro Bank's strong deposit base with our lending capability is compelling.

“Metro Bank is admired for its fresh approach to banking and I am looking forward to helping the bank expand its offering and meet more customer needs.”

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