What’s going on at Metro Bank?

Metro Bank has always taken pride in doing things differently.

November 30, 2023
What's going on at Metro Bank?
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Connor Sephton

Written By

Connor Sephton

 

It launched in 2010 to much fanfare with vibrant bank branches and a “chief canine officer” — billing itself as a breath of fresh air following the financial crisis.

But beyond aesthetics, there were other compelling points of difference when compared with the banks and building societies dominating the financial landscape. Top of that list was being open seven days a week from 8am to 8pm. Given how most rivals kept strict office hours, with some even closed on Wednesdays, this was a game-changer for customers with 9-to-5 jobs.

Fast-forward to now, and these unique selling points have been plunged into doubt. Metro Bank has now confirmed it may stop opening on weekends, and close earlier in the day too. Over 20% of the company's 4,200-strong workforce are also set to lose their jobs.

So: how did we get here, and what does this mean for Metro Bank's customers? 

What's going on? 

In short, Metro Bank is currently scrambling to cut costs.

Shareholders recently approved a £925 million rescue deal, with a shake-up in the boardroom and a Colombian billionaire assuming majority control. 

But painful decisions also need to be made, with the bank aiming to save £50 million a year.

Some of these woes date back to 2019, when the company was mired in an accounting scandal. Metro Bank had failed to accurately classify how risky some of the loans on its books were, meaning more capital should have been set aside in case some of those deals went bad.

That sparked a dramatic decline in Metro Bank's share price — a 98% drop in the space of two-and-a-half years — with some customers emptying their accounts amid concerns for its future.

In recent months, Metro Bank has been in desperate need of a cash injection so it can continue expanding, with executives setting their sights on a bigger presence in the North of England. Without this capital, its ability to lend could be hugely stymied.

Other efforts are also underway to strengthen its balance sheet. In recent days, Sky News reported that Barclays is in exclusive talks to snap up Metro Bank's £3 billion portfolio of residential mortgages.

All of this amounts to a series of unfortunate events for a business that made headlines by becoming the first new high street bank to open in the UK for 150 years.

Should I be worried?

The developments at Metro Bank — when coupled with the high-profile collapses of several banks in the US — do make for concerning reading. However, there are a couple of things worth bearing in mind.

First off, if the worst did happen and Metro Bank was to fail, the Financial Services Compensation Scheme would step in, meaning every account holder would be entitled to receive up to £85,000 of their savings back.

Customers with existing loans and mortgages are unaffected by recent developments.

Metro Bank also argues that it's back on the path to profitability after ending the first half of this year £15 million in the black.

After the review of opening hours was announced, the bank's 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.”

It's business as usual for Metro Bank — but with 76 branches nationwide and over 2.7 million customers, the stakes are high.

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Mentioned Banks

About Barclays Bank Barclays is a British multinational investment bank and financial services company. It was founded in 1690 and is headquartered in London. Barclays originated...
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About Metro Bank Metro Bank is a retail bank based in the United Kingdom. Founded in 2010 by Vernon Hill and Anthony Thomson, it is the first new high street bank to open in the...
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