Metro Bank, a challenger in the UK retail banking sector, is facing an uphill battle against established players such as Barclays (LON: BARC ), Lloyds Banking Group (LON: LLOY ), HSBC, and NatWest. Despite regulatory backing and lobbying for more lenient risk-weighted asset calculation models, gaining market share has proven to be a slow and costly process for these emerging banks.
On Friday, it was reported that Metro Bank recently raised £325 million ($444 million) in emergency capital following a drop in share value due to delayed regulatory approval for its internal credit model. This comes alongside a significant debt refinancing effort of £600 million ($820 million). The bank's business model, which includes operating high-cost branches for extended hours and maintaining a 90% cost-to-income ratio, has been criticized when compared to rival challenger OneSavings Bank.
Despite these challenges and stagnating loan book, Metro Bank's CEO Dan Frumkin, backed by the largest shareholder Jaime Gilinski Bacal, continues to express optimism about the bank's future. The bank plans to expand its branch network and sees potential for future acquisitions among "mid-tier" banks.
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