Metro Bank has announced plans to slash 1,000 jobs and discontinue its iconic seven-day branch model, as part of an extensive cost-saving initiative, following a significant expansion of its cost-cutting strategy post-autumn rescue deal.
The bank revealed on Wednesday that it has enlarged its original £30 million cost-saving plan, initially announced in October, to £50 million. This increase comes after surpassing its target of axing around 200 more staff and now aims to achieve an additional £30 million in cost reductions by year-end, bringing the total savings to £80 million.
Daniel Frumkin, the CEO of Metro Bank, indicated that the bank is contemplating further job cuts, having already streamlined costs by £44 million through a workforce reduction of 22%. Additionally, Metro Bank will be scaling back its seven-day branch opening model across its 76 branches starting April. This includes the cessation of Sunday operations, reduction of daily hours in some branches, and transitioning some to five-day-a-week opening.
Frumkin stated, “Based on our analysis, we will still maintain longer opening hours than our competitors on the high street, aligning them with actual customer activity.”
These extensive changes come on the heels of Metro Bank securing a £925 million rescue package in October, which involved substantial investment from Colombian billionaire Jaime Gilinski Bacal. This rescue package helped Metro Bank avert potential breakup or takeover amid regulatory challenges.
Benjamin Toms, an analyst at RBC Capital Markets, emphasised the significance of execution in Metro Bank’s restructuring efforts, noting that the refinancing package has provided management with valuable time to reshape the bank.
Metro Bank reported a pre-tax profit of £30.5 million for 2023, marking its first statutory pre-tax profit since 2018, a notable turnaround from the £70.7 million loss reported a year earlier.
While Metro Bank refrained from disclosing specific figures regarding customer withdrawals during the autumn crisis, the bank embarked on a campaign to attract fresh deposits, offering competitive savings rates. However, the success of this campaign resulted in unexpected costs, prompting Metro Bank to aim for a reduction in its deposit base in 2024.
Despite the positive financial results, Metro Bank executives acknowledged the challenges ahead, anticipating economic headwinds and increased competition among lenders, which could impact revenue and profitability.
Nevertheless, Metro Bank remains committed to its strategy of focusing on lending to businesses, particularly SMEs, which it views as a growth opportunity. Frumkin highlighted the bank’s agility in adapting to changing priorities, exemplified by a significant increase in business loans approved in the early part of the year.
Metro Bank intends to continue expanding its branch network, particularly in SME-centric locations, underscoring its commitment to being a leading community bank.
Following the announcement, Metro Bank shares experienced slight fluctuations, initially rising before trading lower by mid-morning.
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Metro Bank to Cut 1,000 Jobs and cancels seven day branch openings
