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.
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, with reports suggesting 800 could go.
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.’
The lender expects to take a lower-than-expected one-off restructuring charge of between £10million and £15million in 2023.
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.
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.’
Earlier this month, the bank said it saw a 5 per cent drop in deposits in the third quarter but claimed outflows had returned to ‘more normal ranges’ after its capital injection.
Metro Bank launched in 2010 to challenge the dominance of Britain’s big banks, with a heavy focus on branch branch banking, at a time when others were pivoting to digital operations. The group has been hit by a string of setbacks in recent years, including accounting errors, leadership departures and delayed regulatory approval for key capital reliefs.
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Metro Bank cuts 20% of workforce as it ‘reviews’ seven day opening hours