Metro Bank Holdings PLC issued today modernize on the cost reduction plan to start in the fourth quarter of 2023, which was expected to deliver cost savings of at least £30m per annum (with 75% of these cost savings to be realized in 2024 and all cost savings to be realized from 2025 onwards).
Following further assessment of the cost base, Metro Bank has now identified potential cost savings of up to £50m per annum. Implementation of the cost reduction plan is expected to be completed in the first quarter of 2024 and a one-off restructuring charge of £10-15m is expected in 2023, which is lower than previously forecast.
While the Company remains committed to stores and the high street, it will transition to a more cost-effective business model, investing in automation for back-office services and operations and improving digital channels, particularly for deposits. The Company is reviewing seven-day opening and extended store hours across its network of stores and is in discussions with the FCA regarding the impact on customers of any such changes.
The Company continues to look for locations in the North of England for new stores, as previously communicated. Metro Bank will also take steps to simplify its operations and selectively streamline lending to focus on relationship banking and maximize risk-adjusted returns on regulatory capital.
These actions are expected to reduce the number of employees by 20%, but will not affect areas of growth.
Daniel Frumkin, CEO of Metro Bank, said:
“The support shown by our investors through this transaction will enable Metro Bank to accelerate its growth plans, with the new capital allowing us to unlock the potential of the business and deliver sustainable profitable returns as we strive to be the number a community bank.
We remain committed to the shops and the high street, but will transition to a more cost-effective business model while remaining focused on customer service. These actions alongside other cost-cutting initiatives are expected to deliver savings of up to £50m a year on a year-on-year basis.”