Metro Bank Holdings PLC on Thursday said it expects to cut a fifth of its workforce and the lender is reviewing its policy of keeping branches open seven days a week as it looks to ‘simplify its operations’.

The London-based lender had announced a cost reduction plan in early October, to be implemented in the fourth quarter of 2023. It expected this to deliver savings of at least £30 million per year.

On Thursday, however, Metro Bank said these cost cuts will go deeper. It has identified potential cost savings of up to £50 million annually.

The bank said it is reviewing seven-day opening and extended store hours across its branches. Metro Bank will also ‘take action to simplify its operations and selectively streamline lending’, which it expects to result in a 20% reduction of its workforce. According to its latest annual report, it employs around 4,000 people.

Metro Bank expects implementation to be completed in the first quarter of 2024. It also expects a one-off restructuring charge in 2023 but said this will be lower than anticipated, at between £10 million to £15 million.

However, the bank also said it continues to seek sites for new stores in the north of England.

Metro Bank said it has completed £325 million capital raise it had announced in October, to shore up its coffers.

Chief Executive Officer Daniel Frumkin commented: ‘The support shown from our investors through this transaction will allow Metro Bank to accelerate its growth plans, with the new capital allowing us to unlock the potential in the business and deliver sustainable profitable returns as we strive to be the number one community bank.’

Metro Bank announced in early October that the raise consisted of £175 million of new notes, and £150 million of new equity. It also secured a refinancing package for £600 million of its outstanding debt securities.

Metro Bank said the £150 million of equity was structured as a ‘firm placing’ of 500.0 million shares at 30 pence each. This placing completed on Thursday.

Metro Bank said the fundraise had significantly strengthened its capital ratios, ‘providing the opportunity to grow assets over the coming years’.

Metro Bank’s stock suffered in September, with investors rattled by reports of the fundraise.

It was another in twist in what has been a tricky few years recently for Metro Bank.

Back in 2019, UK regulators found an accounting error in Metro Bank’s loan book. In January of that year, Metro Bank announced it had underestimated the risk on its commercial loans book and needed to raise capital to compensate for the shortfall and, as a result, was forced to issue an update highlighting the increased risk.

More recently, Metro Bank in September of this year announced it had not received permission from regulators to change the way it calculated the capital requirements on its mortgage book.

That change would have improved the bank’s capital position and made it more profitable. At the time, Metro said that while it ‘continued to engage with the PRA on its application, there is no certainty that approval will be obtained’.

Metro Bank was demoted from the FTSE 250 index in September of 2019. It has not returned since. The company had listed in 2016.

Shares in Metro Bank have lost much of their value in recent years. It now has a market capitalisation of just £69.1 million, having been valued at around £3.5 billion at its peak five years previously.

Shares in Metro Bank were up 5.6% at 40.75 pence in London on Thursday.

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