22 March 2012 – Reuters
(Reuters) – Metro Bank, whose launch in 2010 marked the arrival of Britain’s first new High Street retail bank in more than 100 years, has plans to hire around 260 more staff this year and is looking for additional capital to fund its development.
Chief Executive Craig Donaldson declined to comment on how much capital could be raised, but sources with knowledge of the matter said the bank could seek up to 150 million pounds from private investors this summer.
Donaldson said Metro Bank, still a minnow compared to Britain’s “Big Four” of Barclays (BARC.L), HSBC (HSBA.L) and part state-owned Royal Bank of Scotland (RBS.L) and Lloyds (LLOY.L), expected to employ some 700 staff by the end of 2012, from around 440 at present. It will open nine more branches in the London region to bring its total number of branches to 20.
“We are looking for more capital to power the engine. We’re creating careers here,” he told Reuters.
Britain is keen to introduce more competition into the retail banking market in the wake of the financial crisis, which has led to the arrival of a few new entrants – such as Metro, Aldermore and Shawbrook Bank – and thrown up takeover opportunities for others.
Earlier this year, Virgin Money bought bailed-out bank Northern Rock, while mutually-owned The Co-Operative Group is hoping to buy some 630 retail branches from Lloyds.
But the Co-Op/Lloyds deal is proving to be complex, and the difficulties of breaking into the British retail bank market were highlighted when retailer Tesco (TSCO.L) delayed the launch of its current account service.
Metro Bank, whose investors include fund management company Fidelity and property investors the Reuben brothers, remains loss-making. It hopes to break-even by 2014, and could consider a stock market listing by that time as well.
“We’re still aiming for a 2014 break-even. The easiest way for me to make a profit would be to stop growing the business, but that would be damaging in terms of our long-term profitability,” said Donaldson.
NO CONCERNS OVER SMALL MORTGAGE BUSINESS
Donaldson said Metro Bank had more than 60,000 personal and commercial customers – a tiny fraction of “Big Four” rivals.
Some analysts have added that although Metro Bank has steadily taken in customers’ deposits, its small mortgage lending business has made it hard for the company to make money.
Donaldson denied this was the case, saying Metro Bank had made good progress in terms of lending to small-and-medium-sized enterprises (SMEs), though he declined to give specific figures.
“We have several thousand customers to whom we lend, with a good mix, including unsecured lending and credit cards. The biggest part of our lending is to commercial businesses, and we’re winning SME business all the time.”
The bank’s launch in July 2010 attracted much publicity, partly due to marketing gimmicks such as offering free biscuits for customers’ dogs. Metro has also sought to stand out by making its branches open seven days a week.
Although the company’s main focus is on the mainstream London retail and commercial banking market, Metro is also looking to build up a private banking arm.
Last year, it hired Kirsty MacArthur – a former Coutts and UBS (UBSN.VX) banker – to head its fledgling private banking arm.
Donaldson said the company had won some clients away from the likes of Coutts and even had millionaire customers at its flagship Holborn branch in central London.
“I have customers who have several million with us.”
($1 = 0.6310 British pounds)