Public Float is Next Step for Ambitious Banking Minnow  

23 October 2013 – The Times

Metro Bank is considering listing on the stock market to help to fund its drive to be a new force in high street banking. The loss-making lender that was founded three years ago intends to raise at least £100 million, which it would use to finance additional consumer loans and to back the development of Britain’s first new branch network in a century. If the board opts for a flotation, it almost certainly would take advantage of investor demand and list on the stock exchange within the next few months.

While discussions between the directors continue, it is understood that no firm decision has yet been reached. Metro Bank may yet decide to raise capital from its existing investors, which include Steve Cohen, the hedge fund entrepreneur, and the Reuben brothers, the billionaire investors.Vernon Hill, who founded Metro after setting up several banks in the United States and is now chairman, is also a financial backer.

Metro executives are reported to have held discussions with investment bankers about the possibility of a listing, but they are not thought to have agreed a likely valuation. The prospect of a listing for the challenger bank, first reported by Sky News, came as Metro said that it was preparing to record an after-tax operating loss of £11.5 million for the third quarter, attributed to the cost of its growth efforts.

The bank, which opens seven days a week and features dog-friendly branches, has developed rapidly since it opened in Central London in 2010. It intends to bolster its network of 20 branches in London and the South East by opening another, in Kingston-upon-Thames, this month and a further three before the end of the year. Metro has customer deposits of more than £1 billion, which swelled by £205 million in the three months to the end of September. It has 238,000 personal and commercial accounts and lent individuals and businesses just under £200 million in the quarter, taking its total loan book to £565 million, it said yesterday.

Metro Bank also claimed to be a big beneficiary of new rules introduced last month that enable customers to switch bank accounts within seven days. The number of customers switching to Metro from rival banks doubled in the past month, it said, claiming to have won significant business from HSBC and Santander. The Government is keen to break the dominance of the Big Five high street lenders, which also include Barclays, Lloyds and Royal Bank of Scotland, and to promote increased choice for customers. Metro claims that it is able to open customer accounts quickly and provide on-the-spot bank cards and cheque books. It is one of several so-called challenger banks to set up shop over the past few years, but it is the only one to build a network of branches. Metro declined to comment on its fundraising plans yesterday.