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In January 2019, Metro Bank disclosed that because of an accounting error, it had earlier failed to report inadequate capital backing some commercial loans. The bank, which was launched in 2010 and now has expanded to 66 branches, reported that the risk-weighted assets rose to £8.9bn â up from £7.4bn at the end of September â revealing that the bank was more exposed to riskier loans than previously thought. Metro had found the error during an end-of-year review and said no deterioration in the performance of the loans was seen. Though at first, the chairman said no new funding would be required, the company was forced to prepare a £350m share issue and adjust its long-term growth plans. The Financial Conduct and the Prudential Regulation both the authorities are investigating the affair.[optin-monster-shortcode id="wxhmli4jjedneglg1trq"]
Metro Bank PLC is a retail and corporate bank with operations in the United Kingdom. The company focus on personal banking, offering a range of banking products and services, including current and savings accounts, credit cards and personal loans. It is amongst the oldest challenger banks in the UK. Recently the bank announced its FY 2018 earnings results, reporting pre-tax profits rose by 130% on an underlying basis to £36.6m, below the analysts' expectations of £39m, and total assets were £21.7bn, a rise of 32% over the year.
 The bank had also announced last month that Ben Gunn would be appointed as deputy chairman in April, a newly created position. He has already breached the corporate governance code which recommends nine-year maximum board tenure. Officials at the Financial Conduct Authority want to thwart the move and pressed for a broader shake-up of the nine-person board, though the FCA does not have the power to unilaterally block an appointment. This comes at a time when six of its nine non-executives have been on the board since shortly after it was founded nine years ago, raising questions on corporate governance under the chairmanship of co-founder Vernon Hill. He is also accused of stacking the board with his friends and investors have started demanding new faces on the board.
Amid the governance irregularities, the bank has so far made no major personnel changes. Though Chief executive Craig Donaldson offered to resign, no action was taken on it. Since the accounting error was revealed, Metro's shares have declined 29 per cent, but there haven't been any calls by investors to seek Mr Hill's replacement. The poor governance was evident even before the news when it was reported that £21m in fees were paid to Mr Hill's wife's design firm and £120,000 a year was spent on Mr Hill's travel. Still, instead of voting against the chairman's re-election, 96 per cent of the shareholders voted in his favour. The company has not faced any pressure from analysts as well: most of them still have a buy or hold recommendation, even though its net interest margin had been squeezed from 1.94 to 1.77 per cent.
However, the regulators have taken note of the whole situation at the bank, and at least one official has indicated that an overhaul was long overdue. Many members of management are set to lose their "independent" status soon.
