Metro Bank Announces 800 Job Cuts as Cost-Cutting Plan Begins
In a move described as “disgraceful” by labor unions, Metro Bank has announced a cost-cutting plan that will result in around 800 job cuts. The plan is part of efforts to save £50 million ($63 million) a year.
On the same day as this announcement, Lloyds also confirmed plans to let go of some employees, and earlier in the week, Barclays revealed it was shedding 900 jobs across its UK business.
Metro Bank, which opened in 2010 as the first challenger to Britain’s major main street banks, is also reviewing its unconventional policy of keeping branches open seven days a week. The lender’s shares gained more than 3% following the announcement, but are still down 67% so far this year.
CEO Daniel Frumkin stated, “We remain committed to stores and the high street but will transition to a more cost-efficient business model while remaining focused on customer service.”
However, Chris Beauchamp, chief market analyst at stockbroker IG, expressed concern that these changes could “sorely diminish” the appeal of the bank.
The decision to cut jobs so close to Christmas has been described as “disgraceful” by labor unions, who are concerned about workers facing real worries about how their families will cope as food and fuel prices rise.
The announcement also comes amid a trend of major employers trimming staff numbers as the holiday season approaches. In November alone, several companies, including Citigroup, Charles Schwab, Vice Media, Continental, and Maersk, have announced job cuts.
The news of the job cuts also follows the approval of an emergency equity raise last month, in which shareholders agreed to a rescue deal involving Colombian billionaire Jaime Gilinski Bacal taking control of the bank.
The decision to cut jobs and implement a cost-cutting plan comes as UK banks face increased funding costs and competition for customer deposits, as well as the risk of borrowers defaulting on loans due to rising interest rates.
Overall, the move by Metro Bank to cut jobs and implement a cost-cutting plan is reflective of the challenges faced by UK banks in the current economic climate.