Metro Bank chairman steps down, profits tumble
The lender described the last six months as ‘challenging’.
Metro Bank said the search to replace its chairman Vernon Hill will begin “immediately”, as profit tumbled at the troubled challenger bank.
The business reported pre-tax profit plunged 84 per cent to £3.4m over the first six months of the year, after it was forced to sell assets and upgrade internal controls following an accounting blunder in January.
The FTSE 250 bank said commercial clients had withdrawn £2bn of deposits after it revealed it had underestimated how much shock-absorbing capital it held, which led to a £375m cash call to investors completed in May.
Metro, founded by flamboyant American Hill nine years ago, also sold a £521m portfolio of retail buy-to-let mortgages to hedge fund Cerberus to bolster its finances during the period.
‘Challenging’ six months
Metro chief executive Craig Donaldson (pictured) said: "This has been a challenging first half for the bank, with deposit outflows following intense speculation at the time of our capital raise in May.”
The bank’s senior independent director Sir Michael Snyder added that, “Metro Bank has now reached a point where an independent chair is appropriate to oversee the next stage of our journey and that process will start immediately”.
The business said Hill would remain on its board as president.
The bank, which runs 67 branches and has 1.8 million customers, was founded by Hill and British banker Anthony Thomson in 2010 to challenge the dominance of UK high street banks in the wake of the financial crisis two years earlier.
Unlike other challenger banks, it opened branches, while high street banks closed hundreds of outlets each year, which they said were underused.
Metro branches are open earlier and longer than rivals, are branded in bold red, white and blue colours, with staff winning a reputation for good customer service.
Hill, 73, said his stores welcomed dog owners, and installed his Yorkshire Terrier Sir Duffield - the bank's ‘chief canine officer’.
Despite the knock to the bank’s finances and reputation, it is still one of the few UK challenger banks to return profits to investors.
Hill made his reputation in US banking when in 1973 he founded Commerce Bank with one branch at just 26. When he sold it in 2007 for $8.5bn, the business boasted 440 branches.