Metro Bank is set to reduce its workforce by approximately 800 jobs by the end of March and reconsider its well-known seven-days-a-week branch model. This decision comes as part of the bank’s intensified efforts to cut costs following a multimillion-pound rescue deal last month.
The bank disclosed that the decision to trim down a fifth of its 4,000-strong workforce stemmed from a “further evaluation of the cost base.” This evaluation identified potential savings of up to £50 million annually, including investments in automation and a potential adjustment of operating hours across its 76 branches.
The targeted cost reduction of £50 million exceeds the initial estimates, as Metro Bank had previously announced plans to cut costs by £30 million just days after securing a £925 million rescue package from investors in early October.
The recent deal managed to avoid Metro Bank facing a possible breakup or being taken over by another UK bank. Instead, the outcome is that Metro, initially co-founded by US billionaire Vernon Hill in 2010, is now under the control of Colombian billionaire Jaime Gilinski Bacal.
The intensified focus on cutting costs doesn’t come as a surprise. Bacal, now holding a 53% stake in Metro, built his fortune by acquiring and reviving struggling banks in Latin America.
At present, the staff constitutes about 45% of Metro Bank’s overall expenses. The bank made history in 2010 as the UK’s first new high street lender in 150 years, emphasizing in-person banking.
Daniel Frumkin, the CEO, expressed the commitment of Metro Bank to both stores and the high street. In a statement, he outlined the bank’s dedication to transitioning to a more cost-efficient business model while keeping a strong focus on customer service. Frumkin stated, “These actions, alongside other initiatives to reduce costs, are expected to deliver savings of up to £50 million per year on an annualized basis.”
The bank plans to “simplify its operations” by investing in automation for service and back-office operations, as well as enhancing digital channels, particularly for deposits. The statement from Metro Bank assures, “These actions are expected to result in a 20% headcount reduction but will not impact areas of growth,” highlighting the bank’s ongoing plans to expand its branch network into the north of England.
The bank announced plans to “review seven-day opening and extended store hours across the store network.” Currently, discussions are underway with the Financial Conduct Authority to assess how any changes in hours might affect customers.
As part of the cost-cutting strategy, the bank anticipates a one-off charge in the range of £10 million to £15 million. The completion of this plan is expected by March.
Following the announcement on Thursday, shares saw a 5% increase.
