After Metro Bank recently pulled back from plans to expand and decided to move away from lending for mortgages, the bank said it will return £50 million from the RBS bailout fund, according to a report.
The company’s plans were thwarted when it was revealed that it was miscategorizing a number of loans when figuring out capital requirements.
The error caused the departures of Chairman Vernon Hill and CEO Craig Donaldson. The bank had to reconfigure its strategy after fourth-quarter results showed a pre-tax loss of £130.8 million, which included a £68 million write-down related to stopping IT projects that are no longer part of the bank’s strategy.
The bank no longer plans to open 15 new locations in northern England. The BRC Capability and Innovation Fund, which has been handing out capital to challenger banks that focus on small business lending, had promised 30 new locations.
Three banks – Metro, Starling and ClearBank – were collectively given £280 million from the RBS bailout fund last year. The banks beat out better-known organizations like TSB Bank, The Co-operative Bank and CYBG.
Metro got the most money out of the total amount, receiving £120 million. Starling got £100 million and ClearBank got £60 million.
The bank also made the decision to step away from small and medium-sized business propositions that would only benefit a small group of firms, such as initiatives like virtual accounts, pooling and lending transformation.
Metro will also outsource its back-office operations to locations that are more cost-effective, and it will also get rid of some middle management positions.
“Our financial performance reflects a very challenging year for Metro Bank. External headwinds, internal challenges and actions we took to put the business on a more positive trajectory are reflected in the results,” said Dan Frumkin, CEO at Metro Bank.