Metro Bank founder: I told them branches wouldn’t work 10 years ago
The founder of Metro Bank has claimed he warned the firm against its sprawling network of branches some ten years ago but the board failed to listen, as he fired a barb at suggestions it could slash costs while retaining its physical footprint.
Anthony Thomson, who founded the bank in 2007 before leaving in 2013, said the branch model was outdated and Metro Bank’s future would be “challenging” with its physical footprint still in place.
Metro Bank was forced into an emergency cash raise over the weekend including a £325m equity investment from shareholder Spaldy Investments, led by Colombian billionaire Jaime Gilinski Bacal.
The injection made Spaldy and Bacal a majority shareholder in the firm and came alongside £600m of debt refinancing package. Bondholders waived through its new refinancing plans yesterday afternoon.
Thomson said the firm had been on the decline for years and got its strategy wrong by doubling down on branches.
“I saw the biggest change in consumer behaviour in my life in the market data as I was looking at – this move from traditional banking, branch based banking, to digital, and mobile in particular,” he told City PM
“It was very clear to me that the strategy of retail only had to change. I shared my views with the board, and the board didn’t share those thoughts and felt the branch strategy still has legs, and that was the point in which I stepped down.”
Metro Bank is planning to open 11 new ‘stores’ in the north of England by 2025. However, analysts have warned that branches are costly and run against the prevailing shift to online banking.
Bosses have claimed they will slash costs at the lender but Thomson agreed the plans would be a struggle while keeping its entire physical footprint intact.
“I would describe the future of Metro Bank as challenging,” he added.
Thomson sold his last remaining shares in the firm in 2015. After leaving the bank he went on to found Durham-based digital lander Atom Bank, which posted its first profit this year and is expected to float in London sometime next year. He also launched start-up accelerator Archie in September.
“Banking is fundamentally a people business and over the years Metro Bank has proved there is a place for a targeted branch model that combines stores and digital channels with exceptional customer service,” a Metro Bank spokesperson said.