Metro Bank plans to cut about 800 jobs by the end of March, and review its famous seven-days-a-week branch model, after ramping up cost-cutting plans in the wake of last month’s multimillion-pound rescue deal.
The lender said plans to cut a fifth of its 4,000-strong workforce followed “further evaluation of the cost base”, which found it could save up to £50m a year, including by investing in automation and potentially scaling back opening hours for its 76 branches.
That is higher than original estimates, with Metro saying last month that it planned to cut £30m in costs, days after it clinched a £925m rescue package from investors in early October.
The deal avoided a potential breakup or takeover by a rival UK bank. Instead, it resulted in Metro – which was co-founded by the US billionaire Vernon Hill in 2010 – coming under the control of another wealthy businessman, the Colombian billionaire Jaime Gilinski Bacal.
The ramped-up cost-cutting drive comes as little surprise, given that Bacal – who now owns a 53% stake in Metro – made his fortune snapping up and turning around ailing lenders in Latin America
Staff currently account for about 45% of Metro Bank’s overall costs, which became the UK’s first new high street lender in 150 years when it burst onto the scene in 2010 with a big focus on in-person banking.
The chief executive, Daniel Frumkin, said in a statement that Metro Bank was “committed to stores and the high street but will transition to a more cost-efficient business model while remaining focused on customer service. These actions alongside other initiatives to reduce costs are expected to deliver savings of up to £50m per year on an annualised basis.”
Metro said it would “simplify its operations”, while “investing in automation for service and back-office operations and improving digital channels, particularly for deposits”.
It said: “These actions are expected to result in a 20% headcount reduction but will not impact areas of growth,” noting it was charging ahead with plans to expand its branch network into the north of England.
The lender said it would also be “reviewing seven-day opening and extended store hours across the store network”, and was already in discussions with the Financial Conduct Authority about the potential impact that reduced hours may have on its customers.
The cost-cutting plan, which will result in a one-off charge of £10m-15m, will probably be completed by March.
Shares rose 5% after the announcement on Thursday.
Singapore and Zurich tied for the world's most expensive city this year, followed by Geneva, New York, and Hong Kong, the Economist Intelligence Unit (EIU) said on Thursday as it cautioned that the global cost-of-living crisis was not yet over.
On average, prices have risen by 7.4% year on year in local currency terms for over 200 commonly used goods and services, a drop from the record 8.1% increase last year but still "significantly higher than the trend in 2017-2021," it said in a report.
Singapore regained the top of the rankings for the ninth time in the past eleven years due to high price levels across several categories.
The city-state has the world's highest transport prices, owing to strict government controls on car numbers. It is also amongst the most expensive for clothing, groceries, and alcohol.
[1/2]A view of the skyline in Singapore, January 27, 2023. REUTERS/Caroline Chia/File Photo Acquire Licensing Rights
Zurich's rise reflected the strength of the Swiss franc and high prices for groceries, household goods, and recreation, it said.
Geneva and New York tied for third place, while Hong Kong was fifth and Los Angeles in sixth.
Asia continues to see relatively lower price increases on average compared to other regions, it said.
Chinese cities have fallen in its rankings with four cities - Nanjing, Wuxi, Dalian, and Beijing - among the biggest movers down the rankings this year along with Osaka and Tokyo in Japan.
Oil prices were little changed on Thursday as investors eagerly awaited the outcome of an anticipated OPEC+ meeting that could lead to deeper supply cuts in 2024.
Brent crude futures for January climbed 70 cents to $83.80 a barrel by 0935 GMT, on subdued volumes given the contract is meant to expire today. The more active February contract was up 58 cents at $83.46 a barrel.
Meanwhile, U.S. West Texas Intermediate crude futures crept up 55 cents at $78.41 a barrel.
The OPEC+ group, which includes the Organization of Petroleum Exporting Countries and allies including Russia, is expected to hold virtual meetings on Thursday to discuss additional production cuts that could range between 1 million to 2 million barrels per day (bpd) in early 2024.
The meeting, being held on the same day as global leaders gather in Dubai for the U.N. climate conference, was originally scheduled for last week but was deferred due to disagreements over output quotas for African producers.
Implementing additional cuts will send prices higher in the immediate future but long term, their impact will be "dubious", said Tamas Varga of oil broker PVM.
Compliance will be an issue, and the global oil balance is probably much less tight than OPEC estimates, he said, citing the latest commercial inventory data out of the United States and the stubbornly high-interest rates in many major economies that are likely to dampen oil demand.
The U.S. Energy Information Administration on Wednesday reported a surprise build in U.S. crude oil stocks last week, with inventories up by 1.6 million barrels, compared with analysts' expectations in a Reuters poll for a 933,000-barrel drop.
But oil prices on Wednesday shrugged off the data with all eyes on the OPEC+ meeting, analysts said.
Adding to the pessimism on the demand side are China's persisting economic troubles, embodied in the latest factory data published on Thursday, which showed contraction for a second straight month in November.
Euro-zone inflation cooled more than expected, putting the 2% target in sight as investors step up bets that the European Central Bank will cut interest rates sooner than officials suggest.
Consumer prices rose 2.4% from a year ago in November — down from 2.9% the previous month and less than the estimates of all economists in a Bloomberg poll. Price pressures continued easing across almost all categories and remained at a two-year low.
A core measure that excludes volatile components including fuel and food moderated for a fourth month, to 3.6%.
Inflation is undershooting analyst expectations across the 20-nation euro area following the ECB’s unprecedented ramp-up in interest rates. Output is waning as well, however: Gross domestic product shrank 0.1% in the third quarter, leaving the region teetering on the brink of a recession.
Figures earlier Thursday showed those two trends playing out in France, prompting money markets to bring forward bets on the ECB lowering borrowing costs. They now fully price a quarter-point cut by April, compared with June just over a month ago.
ECB officials are adamant, however, that monetary policy must remain tight to ensure inflation makes it all the way back to 2%.
Inflation Rates Are Slowing Across Europe
Annual change in consumer prices in November 2023
Source: Eurostat
Greek central bank chief Yannis Stournaras, normally among the most dovish voices on the 26-member Governing Council, said this week that he doesn’t expect rates to be reduced before mid-2024. Bundesbank President Joachim Nagel said it’s premature to even mention cuts.
Indeed, inflation is likely to tick higher before returning to target due to statistical effects and the wind-down of measures deployed last year by governments to offset soaring energy prices. President Christine Lagarde has warned price gains may quicken “slightly” in the coming months.
Euro-Area Inflation in November
Source: Eurostat
There are also question marks over how much of the rapid policy tightening — 450 basis points of rate hikes in little over a year — is still to hit the economy.
The process is clearly visible in the financial sector, with lending to firms last month showing a first annual drop since 2015. A real estate boom underpinned by rock-bottom rates has also come to an end. Austria’s Signa became a prominent casualty when the centerpiece of the sprawling property and retail group filed for insolvency this week.
The labor market has been holding up, however, with separate numbers Thursday showing euro-area joblessness staying at 6.5% in October.
An official survey of Chinese manufacturers shows that factory activity contracted for a second straight month in November, an indicator of weak demand despite various stimulus measures aimed at supporting the economy.
The official manufacturing purchasing managers’ index fell to 49.4 in November, down slightly from October’s 49.5, according to data released Thursday by the National Bureau of Statistics.
A figure below 50 indicates a contraction in manufacturing activity while a number above 50 reflects an expansion, on a scale up to 100.
The index has fallen in seven of the past eight months, with an increase only in September. Despite prolonged weakness after the pandemic, the economy is expected to grow at about a 5% annual pace this year.
The new orders sub-index contracted for a second consecutive month, while two other sub-indices for raw material inventory and employment also were lower.
China’s recovery from the COVID-19 pandemic has faltered after an initial burst of growth earlier in the year faded more quickly than expected. Despite prolonged weakness in consumer spending and exports, the economy is expected to grow at about a 5% annual pace this year.
Capital Economics’ Sheana Yue and Julian Evans-Pritchard wrote in a note that the latest surveys may be “overstating the extent of slowdown due to sentiment effects.”
“That turned out to be the case in October, with the hard data not quite as weak as the PMIs had suggested,” they wrote.
In recent months, the government has raised spending on the construction of ports and other infrastructure, cut interest rates, and eased curbs on home-buying.
China’s policy advisors have called for still stronger stimulus measures to revive the economy.