Metro Bank is axing 20 per cent of its workforce in a bid to cut costs, days after its investors backed a £925million rescue package.
The embattled lender is also ‘reviewing’ seven day opening and extended hours across its branch network, it told investors on Thursday.
Metro said it had identified potential cost savings of up to £50million per year, which the group expects to achieve during the first quarter of next year.
Job losses: Metro bank is axing 20% of its workforce in a bid to cut costs
Metro Bank did not confirm the exact number of job losses, but the lender employs around 4,000 people, according to its latest annual report. Hundreds of jobs are expected to be axed.
The group said it remained ‘committed’ to its branches, but would bolster its digital services and use of automation.
It said: ‘Whilst the Company remains committed to stores and the high street, it will transition to a more cost-efficient business model, investing in automation for service and back-office operations and improving digital channels, particularly for deposits.
‘The Company is reviewing seven day opening and extended store hours across the store network and is in discussions with the FCA about the customer implications of any such changes.
‘The Company continues to seek sites in the North of England for new stores as previously communicated.’
Metro Bank also plans to ‘selectively streamline lending’ to focus on ‘relationship banking to maximise risk-adjusted returns’.
Daniel Frumkin, Metro Bank’s chief executive, said: ‘The support shown from our investors through this transaction will allow Metro Bank to accelerate its growth plans, with the new capital allowing us to unlock the potential in the business and deliver sustainable profitable returns as we strive to be the number one community bank.
‘We remain committed to stores and the high street but will transition to a more cost-efficient business model while remaining focused on customer service.
‘These actions alongside other initiatives to reduce costs are expected to deliver savings of up to £50’million per year on an annualised basis.’
Metro Bank shares rose 2.77 per cent or 1.07p to 39.67p on Thursday morning, having slumped over 58 per cent in the last year.
This week, Metro Bank received shareholder approval for a £925million refinancing and recapitalisation plan, backed by Colombian billionaire, Jaime Gilinski, who has become the firm’s biggest investor.
Metro Bank in the UK – a short history
Dog lover: American billionaire Vernon Hill, pictured, launched Metro Bank with Anthony Thomson in 2010
Metro Bank became the first high street bank to open in the UK for more than a century.
It was launched by dog-loving American billionaire Vernon Hill and Anthony Thomson in 2010.
The lender positioned itself as a challenger bank with a heavy focus on bank branches and customer service. Its objective was to challenge the market dominance of banks including Lloyds and Barclays.
As a unique selling point, the lender planned for branches to be open seven days a week, with water bowls and dog biscuits for customers’ pets available.
It has also attracted business from wealthier customers through its provision of safe deposit boxes in branches, a traditional banking service that had fallen out of fashion among many rivals
However, Metro Bank has faced a number of challenges in recent years after an accounting scandal in 2019, which led to some top executives, including Mr Hill, leaving the group. The group had underreported how much capital it needed to hold against its risks.
Two of its former executives were slapped with fines by regulator the Financial Conduct Authority over the reporting errors, which wiped hundreds of millions of pounds off its share value in 2019.
More recently, Metro Bank asked City watchdogs for permission to use its own ratings system to value its mortgages and its assets. That would have freed up cash so it could go out and continue to expand. Without extra cash, the bank’s ability to lend could have been curbed.
But regulators turned down the request in September, stating that they wanted the bank to use an external rating system.
The bank has 76 branches in the UK and approximately 2.7million customers.
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