METRO Bank announced further job losses last week, slashing 1,000 positions after already reducing its workforce by 22 per cent last year. The bank is tripling its cost-cutting plans with the aim to achieve another £30m of cost savings this financial year, saving £80m total.

Much to the disappointment of its cheerleaders, as part of this plan it is also ending its seven-day branch model, closing on Sundays, reducing daily hours in some branches and switching down to five days a week in many cases.

There was much excitement about the launch of Metro Bank back in 2010 as the first new high street lender in 150 years. It was born out of the chaos of the global financial crisis in 2008-2009 which led to public mistrust in the biggest incumbent lenders. Metro Bank was also going against the grain, focusing on face-to-face customer service at a time when most lenders were shifting away from bricks and mortar branches towards online banking instead.

Shares performed very well in the two years following its initial public offering in 2016, but it has faced a series of major setbacks since, sending its shares down by around 96 per cent in the past five years and 70 per cent in the past twelve months.

There was an accounting scandal in January 2019 which sent shares down almost 40 per cent in a single session. Last year Metro Bank faced a balance sheet crisis which forced the lender into a £925m refinancing deal. There were also fears last year more broadly about challenger banks following the collapse of Silicon Valley Bank in the US.

The recent takeover announcement of Virgin Money by Nationwide also shows how difficult it is for challenger banks to compete with larger lenders.

In its latest financial results, Metro Bank reported a narrowing full-year underlying loss in 2023 of £16.9m. But its outlook remains conservative, highlighting that there are still hard yards ahead for Metro and the broader challenger bank landscape.

(c) 2024 City A.M., source Newspaper