Monday 29 April 2019 6:44 pm

Metro Bank investors urged to block re-election of chairman and founder Vernon Hill over payments to his wife's firm

Metro Bank shareholders have been urged to vote against the re-election of chairman and founder Vernon Hill as the lender battles the aftermath of a loans blunder.

Shareholder advisory group Glass Lewis raised concerns over payments made by the bank to Hill’s wife’s architecture firm InterArch, which has a contract for the design of its branches.

Read more: Metro Bank CEO's pay almost halves after loans blunder

Shirley Hill’s company was paid £4.5m by Metro Bank in 2018 and £4.6m in 2017.

“We question the need for the Company to engage in business relationships with its directors and their close relations,” Glass Lewis said in a note to shareholders. 

"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,” it added. 

The bank’s annual report revealed its audit committee had concluded that the service provided by InterArch provided value for the bank but that it would run a competitive tender this year to expand its suppliers.

Having issued the same plea unsuccessfully to investors last year, Glass Lewis said it was now a “priority” for the bank to appoint an independent chair.

The firm ramped up its criticism of the bank’s governance and called for fresh faces on the board to avoid the risk of ‘group-think’ ahead of its AGM next month.

But it acknowledged that steps had been taken in recent months to refresh the board.

It comes after the lender admitted in January that a swathe of commercial had been incorrectly classified and should have been among its “risk-weighted assets”, leading to the worst one-day share price fall for a British bank since the financial crisis.

Read more: Metro Bank urged to shake up board amid regulatory probes

The error has sparked two regulatory probes and shares have fallen 64 per cent since its discovery.

Metro Bank declined to comment.

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