Metro ready to float to raise more capital for growth
(23 July 2015 – Britain) Challenger bank Metro is making progress in seizing more of the market share from the big four High Street banks, effectively doubling loans and deposits in each of its five years.
As it comes up to the fifth anniversary of its launch, when it made a splash in 2010 as the first lender to receive a new licence from the authorities in over 100 years, Metro expects growth to continue.
Chairman and founder Vernon Hill said the bank is aiming to gain 2.5 percent of bank deposits across London and the South East by 2020, which would grow the bank’s balance sheet to £25 billion (A$52.8 billion).
He told The Telegraph he believes growth will continue to pick up, making 5 percent of the market and £50 billion of deposits in subsequent years – at which point he expects the bank could be worth as much as £10 billion.
In regards to the supplementary corporation tax of 8 percent announced by Chancellor George Osbourne in his Budget, Hill said Metro can float regardless.
“Of course we want the tax rate to be as low as possible, but you have to look at us like a growth business.
“The valuation of the company is more like a high-growth tech business than a bank,” he said.
“If you have a company growing at 100 percent per year, it is a different type of animal to a typical bank.”
He expects the bank to start turning a profit at around the end of 2015, and said the float is designed to raise more capital to invest in the bank’s growth.
Hill said he does not know of any existing investors who intend to sell out in the initial public offering.
Metro’s business is split roughly half and half between consumer and business banking, and wants to increase the number of mid-sized businesses working with the lender.