18 July 2015 – Daily Telegraph
The bank hopes to turn a profit at the end of this year as it gears up for a stock market float in 2016
Challenger bank Metro is expected to report a further doubling in size, as it comes up to the fifth anniversary of its launch. The impressive run of results comes as the bank motors towards a stock market in early 2016. Founded by chairman Vernon Hill, the brightly branded new entrant to the financial services market caused a splash when it opened in 2010, as it was the first lender to receive a new licence from the authorities in more than 100 years.
It appears to be making progress in its bid to seize market share from the big four high street banks, effectively doubling loans and deposits in each of its five years. American billionaire Mr Hill hopes to gain 2.5pc of bank deposits across London and the South East by 2020, which would give the bank a £25bn balance sheet. And he believes growth will keep picking up, taking him to 5pc of the market, and £50bn of deposits in subsequent years – at which point he expects the bank could be worth as much as £10bn.
Other challenger banks such as Virgin Money and Aldermore have seen their shares knocked by the supplementary corporation tax of 8pc announced by Chancellor George Osborne in his Budget this month. But Mr Hill hopes Metro can float regardless. “Of course we want the tax rate to be as low as possible, but you have to look at us like a growth business. The valuation of the company is more like a high-growth tech business than a bank,” he said. “If you have a company growing at 100pc per year, it is a different type of animal to a typical bank.”
He expects the bank to start turning a profit at around the end of 2015, and said the float is designed to raise more capital to invest in the bank’s growth. Mr Hill said he does not know of any existing investors who intend to sell out in the initial public offering. Metro’s business is split roughly half and half between consumer and business banking, and wants to increase the number of mid-sized businesses working with the lender.
This week will see the first meeting of its new advisory board, a group of business leaders and investors in the bank who will aim to use their own network of contacts to find more clients for Metro. They include Jamie Reuben, a former director of Metro, who has links to the real estate development business, as well as Denzyl Feigelson, who helped Apple establish iTunes and hopes to bring more music and entertainment firms to the bank, and Amit Bhatia, a senior figure in the construction industry.