Metro Bank cuts two thirds of new branches and returns £50m to BCR
Metro Bank is cutting costs and slashing two thirds of new branch openings as it emerges the firm was hit with a heavy pretax loss of £130.8 million in 2019.
Profits were also down £40.6 million in 2019, after the year kicked off with an accounting scandal which resulted in two regulatory investigations, the eventual departure of its chairman and chief executive, and a 90% plunge in the lender’s market capital.
The bank has now submitted a revised business case, after its new boss Dan Frumkin admitted 2019 has been a “challenging year” causing the team to “[put] their foot on the ball” with regards to new branch openings.
Now, the planned 71 new branch openings will become 24 over the next three years – that’s a two third reduction. Metro Bank’s branches are important to its solid reputation as a customer-focused bank.
The bank scored joint top position with First Direct in the official bank customer rankings in August 2019, with 82% of both banks’ individual British customers saying they would recommend the banks to their family and friends.
Banking Competition Remedies (BCR), the independent body which forced the Royal Bank of Scotland’s (RBS) to provide a £750 million fund to boost competition in the sector, has announced that Metro Bank will be returning £50 million of the original £120 million it was given from the fund for redistribution.
Head of research at 11:FS Sarah Kocianski says this “raise[s] questions about the BCR’s process when it came to deciding which applicants were appropriate recipients of millions of pounds”.
“As the BCR has promised to redeploy the £50 million Metro Bank has handed back, its processes for doing that will be under serious scrutiny from the industry and it will likely be obliged to make them more transparent this time around,” Kocianski adds.
The £50 million will be returned to the Capability and Innovation Fund (CIF), designing specifically to help small and medium business (SMEs).
BCR’s chairman Godfrey Cromwell says “Metro Bank has made progress on its CIF commitments while also, and rightly, coming to BCR with a revised proposal as the context evolved and in line with the CIF scheme processes.”
The independent body also states that it is “now focused on the monitoring and compliance of each recipient’s reporting and deliverables against their original public commitments”.