Originally published in The Financial Times
Metro Bank is planning to raise £387.5m from investors – an increase of £100m on its original target – as it seeks to finance the opening of dozens more branches across the UK.
In a letter to existing shareholders in October, Metro Bank said it was intending to conduct a private capital raising, to help it grow its lending and expand its high street presence.
Although the bank has said that it wants to have 200 branches by 2020, it has yet to turn a profit. Its total pre-tax losses have exceeded £100m in the three years since its launch, highlighting the difficulties of breaking into the UK’s retail banking sector – even when the government has made it a priority to make high street banking more competitive.
When Metro was founded in July 2010 – becoming Britain’s first new high street lender for at least a century – it pledged to stir up the country’s tarnished banking industry. Its 22 branches in London and the southeast have proven popular with customers for their longer opening hours, drive-through facilities and dog-friendly store policy. Last year, customer deposits grew 279 per cent to £576m.
Metro’s plans for further expansion are intended to help it reverse its losses, which reached £45.7m at a pre-tax level in 2012. Earlier this year, Vernon Hill, chairman, told The Financial Times: “Our primary goal is to expand the business . . . and profit certainly will come.”