Shares in high street lender Metro Bank jumped as much as 35 per cent today after it confirmed it was in talks with funds linked to the Carlyle Group regarding a takeover.

It added in a statement there was no certainty an offer would be made and advised its shareholders to take no action.

Even after paring gains in the afternoon, the  takeover talk meant Metro Bank shares were at the top of the FTSE All-Share leaderboard and closed up 29 per cent at 133p per share.

Carlyle now has until the close of business on 2 December to place firm bid for the bank, or walk away from the takeover deal.

Shares in Metro Bank, which have slumped around 57 per cent since February 2020 as it and other mid-sized lenders struggled with low interest rates and competition, but today it tallied its best ever one-day performance.

Any move for the dog-friendly high street bank from US private equity giant Carlyle would be the second major deal involving the challenger banks in recent weeks, with Co-operative Bank making an unsolicited offer for TSB, the UK subsidiary of Sabadell. The Spanish bank rejected the bid for TSB last month.

Metro Bank has been working to turn around its fortunes after a major accounting error in 2019 forced out its top bosses and led to a significant share price fall.

In its most recent results the seven-day-a-week lender posted recovering revenues and shrinking losses, although it still booked a pre-tax loss of £139m for the six months to 30 June

.In its most-recent trading update last month Metro said lending for the three months to 30 September had held firm at £12.3bn as it welcomed signs of a “gradual return to normality”.

Carlyle Group could not be reached for comment