Metro Bank has confirmed 1,000 staff will be axed by mid-April as part of the lender’s £80million cost-cutting drive.
Towards the end of last year, Metro Bank said around 800 jobs were under review following ‘further evaluation of the cost base’.
The lender’s cost cutting drive followed a balance sheet crisis last year that saw Metro Bank finally secure fresh financing and a debt refinancing package, amid fears for its survival.
On Wednesday, Metro Bank said it was on track to deliver £50million of annualised cost savings in the first quarter of 2024, primarily due to the departure of the staff, which comprise 22 per cent of its workforce, by mid-April.
A further £30million of annualised cost savings is expected to be delivered by the end of 2024, the lender added.
Chief executive Daniel Frumkin cautioned that further cost cuts would ‘inevitably’ lead to more jobs going.
Job cuts: Metro Bank has confirmed 1,000 staff will be axed by mid-April as part of a £80million cost-cutting drive. The number of job losses is higher than previously suggested
Metro Bank said the’ exits agreed’ resulted in £43million of annual savings.
A cost-cutting drive helped Metro Bank narrow its annual loss last year, new results showed on Wednesday.
The bank’s underlying pre-tax loss came in at £16.9million for 2023, against a loss of £50.6million in 2022.
The group saw cash outflows stabilise towards the end of the year after an eleventh-hour capital injection. Deposits grew by 1 per cent from June to £15.62billion by 31 December.
The lender confirmed it had also reduced branch opening hours this year.
From 29 March, all 76 branches will no longer open on Sundays or bank holidays and opening hours will be cut following a review launched last autumn.
The group said that the bulk of its branches, 44 sites, will only be open five days a week, from Monday to Friday, 9.30am to 5pm.
The remaining 32 stores will be open six days a week, from 9.30am to 5pm on Monday to Friday, and 11am to 4pm on Saturdays.
Cutting costs: Metro Bank chief executive Daniel Frumkin cautioned that further cost cuts would ‘inevitably’ lead to more jobs going
Frumkin said: ‘During the year we also launched a cost saving plan which included reducing store hours and roles across the organisation.
‘These efforts will ensure the bank is right-sized for the future, with a strong focus on both digital and great customer service.’
The lender added: ‘Whilst we have reduced our store opening hours in 2024, we remain committed to maintaining a physical presence and ensuring that stores remain both accessible and at the heart of local communities.’
Metro Bank said it was working to identify sites for new branches in the north of England.
The group said locations being prioritised were aimed at its support Metro Bank’s SME, commercial and corporate banking operations.
It said: ‘Further store openings in the north of England will predominantly focus on out-of-town locations with parking which are easier for businesses to access and can serve larger populations.’
However, it added that further changes could be on the way to its store portfolio and operations.
Metro Bank said: ‘We will continue to explore options to further right-size our cost base in the months ahead, as we look to secure a sustainably profitable future for the bank. Part of this will include continuing to review our options around stores and our real estate which remain one of the largest components of our fixed cost base.’
The lender added that while its branches remained its ‘core offering’, it would continue working to digitising its operations.
It said: ‘A particular area of focus will continue to be on enhancing our self-service features as well as building out our SME offering where we feel we are continuing to win market share in an area which remains underserved by the market.’
In November, Metro Bank received shareholder approval for a £925million refinancing and recapitalisation plan, backed by Colombian billionaire, Jaime Gilinski, who became the firm’s biggest investor.
In October, reports claimed the bank needed to raise about £600million. As a result, the group’s share price fell by around a third to an all time low of 34p.
Anthony Thomson, the bank’s former chairman from 2010 to 2012, claimed the lender had a ‘limited future’ if it continued to focus on its branch network. He said the lender was pursuing a ‘flawed strategy.’
Metro Bank shares rose 1.02 per cent or 0.35p to 34.75p on Wednesday, having fallen over 69 per cent in the lats year.
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 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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