Shareholders urged to reject re-election of Metro Bank chairman Vernon Hill
Shareholders in Metro Bank have been advised to vote against the re-election of founder and chairman Vernon Hill as the lender grapples with the fallout of a major accounting blunder.
Investor advisory firm Glass Lewis has recommended that shareholders reject Mr Hill’s reappointment at the lender’s annual meeting next month, citing millions in payments made by Metro to his wife’s architecture firm InterArch.
In light of this, Glass Lewis said in a circular: “We question the need for the company to engage in business relationships with its directors and their close relations.
“We view such relationships as potentially creating conflicts for directors, as they may be forced to weigh their own interests in relation to shareholder interests when making board decisions.
“In addition, a company’s decision regarding where to turn for the best products and services may be compromised when doing business with a firm so closely related to one of the company’s directors.”
It added that the “introduction of an independent chair should be a priority”.
The disclosure is likely to pile further pressure on the bank, which has been plunged into crisis since an accounting error was made public in January, after which it unveiled a £350 million cash call to make up for the shortfall on its balance sheet.
“We will keep the outcome of the investigation into mis-classified loans under review,” Glass Lewis added, and also urged shareholders to vote against Metro’s remuneration report after the bank failed to pro-rate finance chief David Arden’s bonus.
Questions have also been raised over the future of chief executive Craig Donaldson, who has come under fire over the debacle for insisting that it was the bank that detected the accounting error as part of a review of its year-end accounts.
Metro later admitted that it was, in fact, pointed out first by the Bank of England and not unearthed by the lender.
The Financial Conduct Authority and Prudential Regulation Authority are investigating the matter.
Once the darling of the financial services sector, Metro’s stock market value has fallen from a peak of £3.5 billion last March to less than £1 billion.
Metro has grown rapidly since it was founded by US banking tycoon Mr Hill in 2010, operating from more than 60 branches across the UK and employing nearly 4,000 people.