- Metro Bank cuts costs
- Workforce and hours reduced
- Focus on automation and efficiency
The challenger bank anticipates additional branch automation as part of its cost-cutting initiatives but maintains that the transition will allow its expansion objectives to continue.
As part of its efforts to avert insolvency, Metro Bank has disclosed its intention to reduce its business hours commitments by 20% and eliminate 20% of its workforce.
The troubled challenger lender unveiled a £30 million cost-cutting initiative last month. It has now revised its annual savings objective to £50 million as part of broader efforts to strengthen its balance sheet.
With approximately 4,000 employees, the organization anticipates a reduction of 800 personnel due to the proposed measures.
Shareholder Approval and Mortgage Book Discussions
Metro, which received shareholder approval for a £925 million recapitalization and refinancing plan earlier this week, is also discussing transferring a £3 billion mortgage book.
The expense reduction initiative, according to Metro, is anticipated to be concluded in early 2024.
According to a statement, it anticipated a one-time penalty of up to £15 million, which would be recorded in the current fiscal year.
The 2010-founded financial institution has approximately 2.7 million clients and 75 branches in the United Kingdom.
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It is open seven days a week to capitalize on public outrage over the closure of high street branches by mainstream banks since the financial crisis by concentrating solely on branch services.
However, it has had difficulty recovering from a 2019 error in which £900 million in loans were incorrectly classified, resulting in a withdrawal of investors and deposits.
Transition to a Cost-Efficient Business Model
The bank announced on Thursday that the organization will transition to a more cost-efficient business model, investing in automation for service and back-office operations and enhancing digital channels, especially for deposits, while maintaining its commitment to physical locations and the high street.
“Along the entire store network, the organization evaluates the potential consequences for customers of seven-day openings and extended store hours. The FCA [Financial Conduct Authority] is currently discussing these modifications.
According to Metro, the cost-cutting initiative will not impact its development areas.
The statement continued, “As previously disclosed, the organization continues to investigate locations in Northern England that can accommodate new stores.”
Metro Bank intends to implement measures to optimize its operations, lend selectively to optimize risk-adjusted returns on regulatory capital and concentrate on relationship banking.
It also disclosed that three board members would resign by the conclusion of the year, resulting in five non-executive directors and two executive directors remaining on the board.
Before the update, shares, which have declined since 2019, were down by more than 60% year-to-date.
They gained 5% in early transactions.
