Metro Bank Plans Further Cost Cuts Amid Ongoing Overhaul

Metro Bank Holdings Plc, the challenger bank that underwent a rescue in October, is set to implement additional cost-saving measures as part of its ongoing restructuring efforts.

The bank announced on Wednesday that it anticipates delivering £30 million ($38.4 million) in further cost cuts by the end of the year. This follows the initial £50 million in savings expected in the first quarter, which involved approximately 1,000 employees — roughly 22% of the workforce — leaving before mid-April.

Despite these cost-cutting initiatives, Metro Bank reported a two-thirds reduction in underlying loss for the year, amounting to £16.9 million. However, the bank adjusted its guidance for return on tangible equity (ROTE) downward, citing lower rate expectations, competitive pressures for deposits, and the UK’s economic outlook.

The revised ROTE projection indicates a shift from a low-single digit expectation in 2025 to a low-mid teens target from 2027 onwards. Deposits remained relatively stable at £15.6 billion, with 52,000 current accounts opened in the fourth quarter.

The bank’s restructuring efforts come on the heels of a rescue deal secured in the final months of 2023, which saw Colombian billionaire Jaime Gilinski acquire a controlling stake in the London-based lender. While acknowledging the challenges ahead, analysts at RBC emphasized that the refinancing package has provided management with the necessary time to reshape the bank.

In addition to personnel reductions, Metro Bank is implementing changes to branch operations, including reduced hours. However, the bank expressed intentions to expand its presence by opening new stores in the north of England.

Regarding regulatory matters, Metro Bank stated that no decision had been made regarding the pursuit of accreditation to use an internal model for calculating risk-weighted assets. While such accreditation could potentially bolster the bank’s capital ratios, Metro Bank clarified that its plans are not contingent upon this approval. Nevertheless, the bank affirmed the ongoing benefits derived from its work on the advanced internal rating-based application.

As Metro Bank progresses with its cost-cutting measures and strategic realignment, the focus remains on executing its restructuring plan to position the bank for sustained growth and stability in the competitive banking landscape.

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