Metro Bank returns £50m to SME fund after 2019 losses

Metro Bank has returned £50m of its original £120m grant to the Banking Competition Remedies (BCR) as part of a 'strategic review' following its 2019 full year results.

Related topics:  Commercial,  Commercial finance
Rozi Jones
27th February 2020
metro bank
"In the 12 months since it was awarded funds, Metro Bank has made progress on its CIF commitments while also, and rightly, coming to BCR with a revised proposal"

BCR manages the Capability and Innovation Fund which encourages eligible lenders to develop and improve the financial products and services which are available to SMEs.
 
The Capability and Innovation Fund comprised a total of £425 million which was divided into four pools.

Metro will deploy Capability and Innovation funds of £70m which will continue to stimulate banking competition in the SME market. The £50m returned will be allocated to the Capability and Innovation Fund and held in trust until later deployment.

Earlier this week, Metro Bank reported a statutory loss before tax of £130.8m for 2019, following a turbulent year in which it miscalculated the risk level of a large number of commercial loans.

Metro said the financial performance reflected a "challenging year", which led to a statutory loss after tax of £182.6 and an underlying pretax loss of £11.7m.

In February 2019, the FCA and PRA began an investigation into the miscalculation of its commercial loans. Metro Bank had to reclassify £900m of Risk Weighted Assets and proposed a £350m equity placing to boost capital levels.

The Bank has since undertaken a strategic review, leading to a write-down of intangible assets worth £68m, transformation costs of £11m, and remediation costs of £27m relating to ongoing regulatory investigations.

Godfrey Cromwell, BCR’s Chairman, said: “Strategy responds to changing circumstances. In the 12 months since it was awarded funds, Metro Bank has made progress on its CIF commitments while also, and rightly, coming to BCR with a revised proposal as the context evolved and in line with the CIF scheme processes.
 
"BCR’s priority is to promote competition in the market for banking services to SMEs. We now have an opportunity to redeploy £50m to further this objective. We will retain a robust focus on monitoring of all grants, while also engaging with the best way to use the returned CIF funds.” 

More like this
Latest from Property Reporter
Latest from Protection Reporter
CLOSE
Subscribe
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.