The initial consideration is £2.5mln, with additional payments of £0.5mln a year from now and £9mln at the third anniversary.
Metro Bank said RateSetter’s originating and underwriting capability gives it an existing, scalable platform to grow its unsecured lending business.
RateSetter is the UK's most popular peer-to-peer lender, said Metro, with over 750,000 people having used its platform either to lend or borrow. Most of its business is unsecured personal loans but the platform also arranges secured auto dealer and property financing.
Ratesetter, which is owned by Retail Money Market, does not hold loans or deposits and lost £8mln in the year to March 2019 on revenues of £33mln.
RateSetter will operate as an independent platform and originate loans under both its own and Metro Bank brands. Co-founder Rhydian Lewis will join Metro Bank's Executive Committee and report directly to Metro Bank's CEO, Daniel Frumkin.
Metro Bank said it will use its deposit base to fund all new unsecured personal loans originated via the RateSetter platform. RateSetter will continue to manage its existing loan portfolio with Metro Bank assuming no credit risk for these existing loans.
In a statement, CEO Frumkin said: "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 … accelerates our plans.”