Metro Bank plc is a
retail and commercial bank operating in the United Kingdom, founded by Anthony Thomson and
Vernon Hill
Vernon W. Hill II (born August 18, 1945) is an American businessman, the founder and former chairman of Metro Bank, a UK retail bank with 77 stores, and assets of £7.4b ($10.6b). He was also the founder, former chairman, president and CEO of ...
in 2010.
At its launch it was the first new
high street bank to launch in the United Kingdom in over 150 years.
[ It is listed on the ]London Stock Exchange
London Stock Exchange (LSE) is a stock exchange in the City of London, England, United Kingdom. , the total market value of all companies trading on LSE was £3.9 trillion. Its current premises are situated in Paternoster Square close to St Pau ...
.
After a period of rapid growth, Metro Bank hit difficulties in early 2019 when it announced it had insufficient capital to meet regulatory requirements, following the discovery of an error in the way it categorised its commercial loans for capital adequacy
A capital requirement (also known as regulatory capital, capital adequacy or capital base) is the amount of capital a bank or other financial institution has to have as required by its financial regulator. This is usually expressed as a capital ad ...
purposes. As a result, it had to raise an additional £350m of capital. Concerns over the announcement and the bank's ability to raise the capital resulted in the bank's share price falling by 75% in less than four months, and large depositors withdrawing cash, because of "adverse sentiment".
History
Metro Bank was granted its licence by the Financial Services Authority
The Financial Services Authority (FSA) was a quasi-judicial body accountable for the financial regulation, regulation of the financial services industry in the United Kingdom between 2001 and 2013. It was founded as the Securities and Investmen ...
on 5 March 2010, the first high-street bank to be granted such a licence for over 150 years. It planned to open between 200 and 250 branches in Greater London
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within ten years of starting up. Its first branch opened on 29 July 2010 in Holborn
Holborn ( or ) is a district in central London, which covers the south-eastern part of the London Borough of Camden and a part ( St Andrew Holborn Below the Bars) of the Ward of Farringdon Without in the City of London.
The area has its roots ...
, central London.
In 2012, the bank raised an additional $200 million in funding from investors including Fidelity, Steven A. Cohen
Steven A. Cohen (born June 11, 1956) is an American hedge fund manager and owner of the New York Mets of Major League Baseball since September 14, 2020, owning roughly 97.2% of the team. He is the founder of hedge fund Point72 Asset Manageme ...
of hedge fund SAC Capital Advisors
SAC Capital Advisors was a group of hedge funds founded by Steven A. Cohen in 1992. The firm employed approximately 800 people , and New York real estate investors the LeFraks and David and Simon Reubens. In the same year, ''Forbes
''Forbes'' () is an American business magazine owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features articles on finance, industry, investing, and marketing topics. ''Forbes'' also re ...
'' magazine reported that Metro's flagship Holborn branch had "...garnered $200 million in deposits, four times the total at the average mature American branch".
On 2 May 2013 the ''Daily Telegraph
Daily or The Daily may refer to:
Journalism
* Daily newspaper, newspaper issued on five to seven day of most weeks
* ''The Daily'' (podcast), a podcast by ''The New York Times''
* ''The Daily'' (News Corporation), a defunct US-based iPad new ...
'' reported that, following a loss of £8.8 million in the first quarter of 2013, Metro Bank's pre-tax losses had exceeded £100 million in less than three years since its launch, but the bank stated that these were planned for, and were "a result of its growth initiatives". In an interview with the ''Financial Times
The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and published digitally that focuses on business and economic current affairs. Based in London, England, the paper is owned by a Japanese holding company, Nik ...
'', Hill said the bank was "...in line with the business plan to rapidly grow this company". He added: "Our primary goal is to expand the business ... and profit certainly will come".
Metro Bank increased its account holders by 50% in the first half of 2013 for a total of 200,000 customer accounts, including 15,000 business accounts. It was aiming to have 200 UK branches open by 2020.
In January 2019, Metro Bank admitted classifying a portfolio of commercial loans for capital purposes incorrectly, thereby failing to hold sufficient capital to meet regulatory requirements; the error applied to around 10% of its loan book.[ The miscalculation was identified through a review by the Prudential Regulation Authority (PRA) but Metro Bank erroneously gave the impression that the bank had identified the incorrect classification itself.][ To correct the error in the capital classification, Metro Bank announced a £350m share issue and said it would reduce its growth plans. It was also reported that the PRA and the ]Financial Conduct Authority
The Financial Conduct Authority (FCA) is a financial regulation, financial regulatory body in the United Kingdom, but operates independently of the UK Government, and is financed by charging fees to members of the financial services industry. The ...
were to investigate the circumstances of the error.[ In December 2021, the bank was fined £5.38m by the PRA after their investigation, saying that it had "failed to meet the standards of governance and controls expected of it" with regards to the risk weighting and classification of commercial loans.
As a result of the admission and the share issue announcement, Metro Bank's share price fell sharply, losing 40% of its value in the month after the announcement] and 75% in less than four months. By March 2019, the BBC #REDIRECT BBC #REDIRECT BBC #REDIRECT BBC
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reported that Metro Bank shares were the second most shorted shares on the UK stock market. Additionally, large depositors began withdrawing funds: Metro Bank admitted that there had been a 4% drop in its deposits in the first quarter of 2019 because of "adverse sentiment".
In November 2021, Metro Bank entered talks with the Carlyle Group
The Carlyle Group is a multinational private equity, alternative asset management and financial services corporation based in the United States with $376 billion of assets under management. It specializes in private equity, real assets, and pri ...
concerning a possible takeover bid.
On 6–8 October 2022, Metro Bank's mobile banking app failed, resulting in its customers being unable to manage their accounts remotely.
Services
Metro Bank provides banking services to personal and business customers. It is authorised by the Prudential Regulation Authority and regulated by both the Financial Conduct Authority
The Financial Conduct Authority (FCA) is a financial regulation, financial regulatory body in the United Kingdom, but operates independently of the UK Government, and is financed by charging fees to members of the financial services industry. The ...
and the Prudential Regulation Authority.
Acquisitions and divestitures
Metro Bank acquired SME Finance in August 2013, and rebranded the business as Metro Bank SME Finance in May 2014.
It was announced in August 2020 that Metro Bank had agreed to acquire Retail Money Market Ltd, a London-based provider of peer-to-peer loans trading as RateSetter. The price would be between £2.5 million and £12 million, depending on performance over the next three years. The purchase was subject to regulatory approval and the agreement of Retail Money Market Ltd shareholders, and was expected to complete in the fourth quarter of 2020. Metro Bank would continue the RateSetter brand and its operations, but new unsecured personal lending would be funded by the bank's deposits, not through peer-to-peer. In February 2021, Metro Bank bought RateSetter's entire portfolio of loans, valued at £384m.
In February 2021, Metro Bank completed the £3.04 billion sale of a residential mortgage portfolio to NatWest
National Westminster Bank, commonly known as NatWest, is a major retail and commercial bank in the United Kingdom based in London, England. It was established in 1968 by the merger of National Provincial Bank and Westminster Bank. In 2000, it ...
. The deal was agreed upon in December 2020.
Management
Founder Vernon Hill received the Institute of Economic Affairs
The Institute of Economic Affairs (IEA) is a right-wing pressure group and think tank registered as a UK charity Associated with the New Right, the IEA describes itself as an "educational research institute", and says that it seeks to "further t ...
' Free Enterprise Award in April 2013. The organisation cited him as "a remarkable entrepreneur who has identified a clear opportunity and entered the UK banking scene at a time when the sector has been under constant fire".
Craig Donaldson, the chief executive officer, started his career on the Barclays
Barclays () is a British multinational universal bank, headquartered in London, England. Barclays operates as two divisions, Barclays UK and Barclays International, supported by a service company, Barclays Execution Services.
Barclays traces ...
graduate scheme in 1995. Later he worked for the Royal Bank of Scotland
The Royal Bank of Scotland plc (RBS; gd, Banca Rìoghail na h-Alba) is a major retail and commercial bank in Scotland. It is one of the retail banking subsidiaries of NatWest Group, together with NatWest (in England and Wales) and Ulster Bank ...
where he met Hill. Together they decided to set up a UK equivalent to Commerce Bancorp
Commerce Bancorp was a Cherry Hill, New Jersey–based bank created in 1973. In 2007, it was purchased by Toronto-Dominion Bank, which merged Commerce with TD Banknorth to form TD Bank, N.A.; all of its banks and branches were given the TD Ba ...
, and this idea grew into Metro Bank. In 2015, Sir Michael Snyder joined Metro Bank's board with a view to developing Metro Bank's small business lending operations.
In October 2019, Hill stood down as chairman. He was replaced by Sir Michael Snyder who was appointed Interim Chairman.
Donaldson stepped down as CEO in December 2019, and was replaced by Daniel Frumkin from February 2020.
Senior leadership
* ''Chairman'': Robert Sharpe (since November 2020)
* ''Chief Executive'': Dan Frumkin (since February 2020)
Former chairmen
# Anthony Thomson (2010–2012)
# Vernon Hill
Vernon W. Hill II (born August 18, 1945) is an American businessman, the founder and former chairman of Metro Bank, a UK retail bank with 77 stores, and assets of £7.4b ($10.6b). He was also the founder, former chairman, president and CEO of ...
(2013–2019)
Former chief executives
# Craig Donaldson (2010–2019)
References
External links
*
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{{UK banks
Banks based in the City of London
Banks established in 2010
Companies based in the London Borough of Camden
Reuben Brothers
British companies established in 2010