UK’s Metro Bank eyes axing 1 in 5 jobs, seven-day banking

By Sinead Cruise, Elizabeth Howcroft and Yadarisa Shabong

LONDON (Reuters) -Metro Bank on Thursday announced sweeping cost-cutting plans aimed at bolstering its finances, which could see the British lender lay off 20% of its staff and axe some of its biggest customer perks including seven-day opening hours.

Metro, which this week received shareholder approval for the equity portion of a 925 million pound refinancing and recapitalisation plan backed by Colombian billionaire Jaime Gilinski, said it expected the cost reduction plan to deliver up to 50 million pounds ($63.45 million) of savings a year.

The bank later on Thursday said it had completed the issuing of new bail-in debt, known as MREL, and its debt refinancing, bringing the transaction to a close.

Metro Bank’s shares were up 3.1% at 1555 GMT after this statement and the earlier publication of the cost-cutting plan, which is due to be completed in the first quarter of 2024.

The bank expects to take a lower-than-expected one-off restructuring charge of between 10 million and 15 million pounds in 2023.

Metro Bank did not immediately respond to a request for clarification on the precise number of jobs at risk. The lender employs around 4,000 people, according to its latest annual report.

Metro launched in 2010 to challenge the dominance of Britain’s big banks but hit a string of setbacks, such as accounting errors, leadership departures and delayed regulatory approval for key capital reliefs.

In addition to the jobs cull, the bank, famous for its extensive, centrally located branch network, said it would invest in automation for back-office operations and improving digital services.

It is also reviewing its seven-day opening and extended store hours and will “selectively streamline lending” to focus on relationship banking to maximise risk-adjusted returns.

“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,” Chief Executive Daniel Frumkin said in a statement.

The bank earlier this month said it saw a 5% drop in deposits in the third quarter but that outflows had returned to “more normal ranges” after its capital injection. Its shares have lost 68% of their value so far this year.

“Metro Bank has prided itself on its outlets with an ‘open all hours’ approach but now after facing some fierce financial headwinds, it’s now had to seriously re-think this strategy,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

“It’s already been a troubling time for staff given concerns about whether the bank would secure a financial lifeline,” Streeter said.

Separately, Metro announced that three board members would step down at the end of the year, leaving the board with five non-executive and two executive directors.

Across the sector, Metro’s rivals are also reviewing their staff costs. Barclays is weighing cutting up to 2,000 back-office jobs in addition to layoffs across its UK retail, corporate and investment bank, Reuters reported, while rival Lloyds has put 2,500 jobs at risk.

($1 = 0.7873 pounds)

($1 = 0.7881 pounds)

(Reporting by Yadarisa Shabong in Bengaluru and Sinead Cruise and Elizabeth Howcroft in London; Additional reporting by Iain Withers; Editing by Rashmi Aich, Sherry Jacob-Phillips, Sharon Singleton, Jane Merriman and Mark Porter)