Metro Bank Shares Rallied 6.98% on Plans To Fire 20% of Its Staff

The Metro Bank Holdings PLC (LON: MTRO) share price rallied 6.98% as of 8:46 GMT after unveiling plans to cut 20% of its workforce to save up to £50 million in annual operating costs. The bank is also reviewing its policy of keeping its branches open the entire week, including on weekends. 

The challenger bank had initially targeted slashing about £30 million in operating costs but has set a more ambitious goal as it seeks to automate most of its back office functions and embrace more technology in its operations.

However, the bank reiterated its commitment to keeping its stores open and said it would not transition into a fully online bank. The bank is highly committed to its high street branches but is seeking ways to reduce its operation costs, which includes letting go of some employees. 

The bank’s transformation involves significant investments in automation for both customer service and back-office operations and enhancements to digital channels, particularly for deposit-related services.

Regarding store operations, Metro Bank is currently reviewing the feasibility of keeping its extended store operating hours at seven days a week. It is also engaged in discussions with the Financial Conduct Authority (FCA) to assess the potential impact of changing the same on its customers.

In addition to these measures, the company is actively seeking locations in North England to establish new stores, aligning with its previous communication. Simultaneously, Metro Bank plans to streamline its operations and selectively optimise lending activities to prioritise relationship banking. 

The strategic actions are anticipated to result in a 20% reduction in the bank's workforce, although growth areas will remain unaffected. The cost reduction plan is scheduled for completion in Q1 2024, with an expected one-time restructuring charge ranging from £10 million to £15 million in 2023. 

Metro Bank’s CEO, Daniel Frumkin, 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.”

Metro Bank share price. 

The Metro Bank share price rallied 6.98% to trade at 41.4p, from Wednesday’s closing price of 38.7p.