Following a series of setbacks for U.K. challenger bank Metro Bank, the financial institution is reportedly looking to reduce its corporate loan exposure and wind down commercial lending operations.
The Times on Sunday (Sept. 15) said Metro Bank would no longer charge early termination fees for corporate borrowers that repay their loans ahead of schedule; a move meant to be part of its broader plans to pull away from corporate lending. Metro will look to instead focus on residential property financing as it seeks a new chairman.
The market shift follows a year of ups and downs for the financial institution marked by a high-profile accounting error, a valuation plummet and fraud investigations.
In February, the Bank of England’s Prudential Regulation Authority said it had discovered accounting inconsistencies at Metro Bank more than a year earlier, leading some shareholders and industry experts to call for resignations of top Metro Bank executives. Shares fell nearly 40 percent following initial reports of the errors related to misclassification of a large portion of the bank’s commercial loan portfolio.
Only days later, the bank revealed it had been the target of a cyberattack.
Then in May, reports emerged that two U.S. law firms had opened investigations into the bank on behalf of investors over concerns of alleged securities fraud. A bank spokesperson at the time described the investigations as “commonplace,” and emphasized investors’ continued support for the bank in the form of a recent $473 million capital raise.
Metro was also awarded a portion of the $1 billion in Royal Bank of Scotland funds allocated to boost competition in the U.K.’s small business banking sector.
At the time, Metro CEO Craig Donaldson said that the investment would “help us bring much-needed competition to the underserved [SMB] hotspots in the north while investing in our digital capabilities and creating new jobs.”