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Metro Bank is to cut a fifth of its staff and review its policy of opening branches seven days a week in an effort to cut costs, after shareholders approved a £925mn refinancing deal this month.
The UK high street lender, which previously targeted annual savings of £30mn, said on Thursday that it was now seeking to save £50mn a year, as part of a wider effort to shore up its balance sheet. The lender employed some 4,000 people as of last year.
Metro Bank also announced a shake-up of its board, with members Anne Grim, Ian Henderson and Monique Melis all deciding to step down at the end of the year.
The restructuring, which the lender described as a “transition”, will involve the automation of some of its service and back-office operations as well as a push towards greater digitalisation, with a particular focus on customer deposits.
The shift includes a review of Metro’s model of having branches open seven days a week, in a sign that the lender is moving away from a focus on bricks and mortar and in-person banking.
Metro Bank has distinguished itself by betting on physical branches and in-store customer service at a time when most lenders have retrenched from the high street.
Chief executive Daniel Frumkin said: “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.” The group also reiterated its commitment to opening new branches in the north of England over the next two years.
Gary Greenwood, an analyst at Shore Capital, said the move away from seven-day opening, which the bank had previously “trumpeted as a differentiating factor” may work better in regional northern towns where footfall typically reduces on Sundays than in 24/7 cities such as London.
Most of Metro’s branches are in and around London, but the lender is looking to expand in other cities including Exeter, Norwich and Nottingham.
The high-street lender said it expected to be hit with a restructuring charge of £10mn-£15mn in 2023, and that it would complete the restructuring plan at the start of the new year.
Metro also confirmed it would on Thursday complete an equity placing as part of a £325mn capital raising plan that was approved by shareholders last week. The bank first ran into trouble after the Bank of England declined in September to grant it capital relief for mortgage lending until at least 2024, which resulted in a capital hole.
After a weekend of negotiations with regulators last month, the lender agreed a £925mn refinancing package, including £150mn of new equity and £175mn of fresh debt.
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