Metro Bank targets 10pc of London market
METRO Bank, which will be Britain’s first new High Street lender to launch in more than 100 years, has a long-term goal to grab up to 10 per cent of the capital’s retail and commercial banking market.
“It is a reasonable aspiration to say that, after 10 years, we will have between five and 10 per cent of the greater London market,” chairman Anthony Thomson (pictured) said.
Metro Bank will open its doors to business and retail customers on 29 July amid a blizzard of publicity and marketing gimmicks such as biscuits for customers’ pets and free breakfasts for clients.
The company is one of several new entrants seeking to break into a retail banking sector battered by the credit crisis and the near-collapse of some of its best-known names.
It is the first new start-up, however, to gain a licence from the Financial Services Authority regulator, and it says it will use an old-style branch network to attract customers and fuel growth.
Metro Bank aims to run more than 200 branches across greater London over the next decade and hopes to end up with a 50/50 split between retail and commercial banking, offering a full range of services including a Metro Bank-branded credit card.
Its business plan is largely inspired by the model used by its co-founder, billionaire Vernon Hill, when he founded America’s Commerce Bank in 1973.
Commerce Bank grew rapidly to become a major force in the U.S. financial industry and was eventually sold to Canada’s Toronto-Dominion Bank in 2008.
Thomson said Metro Bank would follow Commerce Bank’s traditional approach of taking in deposits and lending out a proportion of them.
He said this conservative approach would ensure Metro Bank would be protected against market downturns such as the 2007-2008 credit crisis that led to the nationalisation of British bank Northern Rock, which relied heavily on funding from the financial markets.
“We have no wholesale funding and no debt,” said Thomson.
“We’re about taking in deposits and lending a proportion of those. We don’t expect to lend more than 75 per cent of deposits.”
Thomson added that Metro Bank would be comfortably well capitalised and pass any “stress test”.
“Our Tier 1 capital ratio will be in the very high teens,” he said, declining to provide more specific details.
Thomson also reiterated that the bank could consider a stock market listing in 2013 to raise £250m in capital.
The company has currently raised £75m of capital, with funding coming from the likes of fund management firm Fidelity, property investors the Reuben brothers and New York City real estate developer Richard LeFrak.
Thomson said the company expected to employ around 1,000 people within three years. It currently has just over 100.