Metro Bank to search for new chair as profits decline

Troubled lender Metro Bank has confirmed it is to start the process of looking for a successor to chairman Vernon Hill, as it reported lower profits.

The new appointment will take on the role of independent chairman, while Mr Hill will remain as a non-executive director, founder and president.

The announcement came as the bank unveiled an 83% drop in pre-tax profits during the first half of 2019 to £3.4 million.

In an update on its performance, the bank said it had faced a “challenging” period with £2 billion of net outflows.

In January, the lender, which had 67 branches in London and the South East, said it had under-reported the risk element on some loans by almost £1 billion.

It later revealed a hit to profits and suffered a subsequent sharp decline in share price as it warned it was short of the capital needed to grow.

The bank’s shareholders approved a £375 million equity raise in June which allayed immediate cash flow fears.

But the retail bank’s need to fundraise prompted renewed speculation about the tenure of Mr Hill.

Senior independent director Sir Michael Snyder said: “The Board shares Vernon’s view that Metro Bank has now reached a point where an independent chair is appropriate to oversee the next stage of our journey and that process will start immediately.”

The bank also expects to make further appointments to the board later this year.

Earlier in the day, it announced the addition of former Bank of Ireland executive Michael Torpey to its top team.

The bank also confirmed the sale of a £521 million mortgage portfolio to Cerberus Capital Management, at a price which will translate into a £1.8 million loss in its third quarter accounts.

Metro said it had upgraded its cost savings expectations for the year to between £15 million and £19 million, with 60% of this already captured.

Chief executive Craig Donaldson said: “We described 2019 as a year of transition for Metro Bank and management has continued its focus on our strategic initiatives, upgrading our cost savings guidance to the upper end of our original range, investing in additional fee service offerings and rebalancing our lending mix.”