(qlmbusinessnews.com Wed, 11th Oct, 2023) London, UK —
Co-founder's Warning: Metro Bank's High Street Branch Focus Could Spell Limited Future.
Metro Bank, which recently secured a financing deal to stabilize its financial position, faces an uncertain future if it persists with its strategy of maintaining High Street branches, warns Anthony Thomson, the bank's co-founder and former chairman. The financing deal marked a turning point for the bank, according to Daniel Frumkin, its current CEO, but Thomson deems the branch-based strategy unsustainable.
Thomson, who left Metro Bank in 2012 to establish Atom Bank, an internet-only bank, criticizes Metro Bank's approach, stating that given its financial standing, the strategy leaves it with a “very, very limited future.” He believes that in the current landscape, focusing on physical branches is flawed as it contradicts the consumer shift towards online banking.
Metro Bank was founded in 2010 as a “challenger” bank in the wake of the financial crisis, boasting a commitment to opening branches seven days a week. It currently operates 76 branches and offers online and mobile banking services. However, the bank faced significant challenges in 2019 following an accounting scandal, which led to the departure of top executives.
In recent months, Metro Bank sought regulatory relief to reduce its required reserve holdings, aiming to free up capital for business expansion. This request was declined, leading to a 20% drop in its share price.
The recent financing deal sees Colombian billionaire Jaime Gilinski Bacal and his firm, Spaldy Investments, become Metro Bank's controlling shareholder with a 53% stake. Although the bank's shares rebounded following the deal announcement, its share price has fallen by over half since the beginning of the year.
Despite financial challenges, Metro Bank intends to open 11 new branches in northern England by 2025. Critics argue that branches are expensive, and the current trend is towards digital banking.
The bank has emphasized that it continues to meet all regulatory requirements and that its finances remain strong. It remains to be seen whether its branch-based strategy can lead to a sustainable recovery.
Please Note: The information provided in this article is based on recent developments and statements by involved parties and may be subject to change as the situation evolves.
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