Metro Bank Holdings PLC today issued an update on its cost reduction plan to be launched in the fourth quarter of 2023 which was expected to deliver cost savings of at least £30 million per year (with 75% of such cost savings being realised in 2024 and all cost savings being realised from 2025 onwards).

After further evaluation of the cost base, Metro Bank has now identified potential cost savings of up to £50 million per year. Implementation of the cost reduction plan is expected to complete during the first quarter of 2024 and a £10-15 million one-off restructuring charge is expected in 2023, which is lower than previously anticipated.

Whilst the Company remains committed to stores and the high street, it will transition to a more cost-efficient business model, investing in automation for service and back-office operations and improving digital channels, particularly for deposits. The Company is reviewing seven day opening and extended store hours across the store network and is in discussions with the FCA about the customer implications of any such changes.

The Company continues to seek sites in the North of England for new stores as previously communicated. Metro Bank will also take action to simplify its operations and selectively streamline lending to focus on relationship banking and maximise risk-adjusted returns on regulatory capital.

These actions are expected to result in a 20% headcount reduction but will not impact areas of growth.

Daniel Frumkin, Chief Executive Officer at Metro Bank, said:

“The support shown from our investors through this transaction will allow Metro Bank to accelerate its growth plans, with the new capital allowing us to unlock the potential in the business and deliver sustainable profitable returns as we strive to be the number one community bank.

We remain committed to stores and the high street but will transition to a more cost-efficient business model while remaining focussed on customer service. These actions alongside other initiatives to reduce costs are expected to deliver savings of up to £50 million per year on an annualised basis.”