- Metro Bank axes 1,000 jobs
- Targets £80 million cost cuts
- Branch hours reduced, digital focus
Metro Bank has officially declared that one thousand employees will be terminated by mid-April in an effort to reduce expenses by £80 million.
Approximately 800 positions were under review, according to Metro Bank at the end of the previous year, pending “further evaluation of the cost base.”
Following a balance sheet crisis the previous year, during which Metro Bank managed to secure new financing and a debt refinancing package amidst concerns for its survival, the lender initiated a cost-cutting initiative.
Metro Bank announced on Wednesday that it was progressing as planned to achieve annualised cost savings of £50 million in the first quarter of 2024. This achievement is primarily attributed to the staff rotation, which accounts for 22% of the bank’s workforce, concluding by mid-April.
An additional £30 million in annualised cost reductions are anticipated by the lender by the conclusion of 2024.
Daniel Frumkin, chief executive officer, issued the admonition that additional cost reductions would “inevitably” result in the elimination of more positions.
Metro Bank reported that the “agreed-upon exits” generated annual savings of £43 million.
Metro Bank reduced its annual loss last year due in part to a cost-cutting initiative, according to results released on Wednesday.
In 2023, the bank incurred an underlying pre-tax loss of £16.9 million, compared to £50.6 million in 2022.
In the latter part of the year, cash outflows for the organisation stabilised following an eleventh-hour capital injection. Since June, deposits have increased by 1%, reaching £15.62 billion as of December 31.
Additionally, the lender verified that branch operating hours had been reduced this year.
In accordance with a review initiated in the autumn of last year, all 76 branches will cease operations on Sundays and bank holidays as of March 29. Additionally, the operating hours of these branches will be reduced.
The majority of its 44 locations, the group stated, will be closed only five days per week, from 9.30 a.m. to 5 p.m., Monday through Friday.
The remaining 32 stores will be operational for six days per week, Monday through Friday, 9.30 am to 5 pm, and Saturday, 11 am to 4 pm.
Frumkin stated, “We also implemented a cost-cutting initiative throughout the year, which included reducing store hours and positions throughout the organisation.”
The bank will be well-positioned for the future as a result of these endeavours, which emphasize digital and exceptional customer service.
The lender continued, “Although we have altered our store hours of operation for 2024, we remain dedicated to preserving a physical footprint and guaranteeing that our locations remain easily accessible and focal points of nearby communities.”
Metro Bank stated that in the north of England, it was identifying potential locations for new branches.
The group stated that the prioritisation of locations was intended to assist Metro Bank’s corporate, SME, and commercial banking operations.
It was stated, “Furthermore store openings in the north of England will concentrate primarily on parking-accessible out-of-town locations that are more convenient for businesses and allow them to serve larger populations.”
Nevertheless, the company added that additional modifications to its store portfolio and operations were possible.
Metro Bank stated, “In the coming months, we will continue to investigate opportunities to further reduce our cost structure in an effort to ensure the bank’s long-term profitability.” A portion of this will involve further evaluating our alternatives regarding stores and real estate, which continue to constitute a significant portion of our fixed costs.
The lender further stated that although its branches would remain its “core offering,” it would persist in its efforts to digitise its operations.
It stated, “A specific area of emphasis will persist in improving our self-service functionalities and expanding our small and medium-sized enterprise (SME) offering, in which we perceive ourselves to be consistently gaining market share in a sector that is still underserved by the industry.”
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Metro Bank secured shareholder approval in November for a £925 million recapitalization and refinancing initiative, which was supported by Jaime Gilinski, a Colombian entrepreneur who emerged as the bank’s most significant investor.
October reports indicated that the bank required approximately £600 million in funding. Consequently, the share price of the group plummeted approximately one-third to a record low of 34p.
The bank’s former chairman from 2010 to 2012, Anthony Thomson, stated that if the institution continued to concentrate on its branch network, it would have a “limited future.” The lender, according to him, was employing a “flawed strategy.”
On Wednesday, Metro Bank shares increased 0.35p, or 1.02 per cent, to 34.75p, after declining by over 69% over the past year.
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