Metro Bank founder Vernon Hill will quit the board by the end of the year as the bank continues to deal with the fallout of a major accounting error.
The announcement came as Metro launched a fresh bond sale worth £300m, a week after pulling a similar offer due to lack of interest from investors.
In July Hill announced plans to resign as chairman but had been expected to remain on the board as an independent director.
Metro said Hill will quit the group by 31 December and planned to install one of its existing independent directors as chairman if it fails to find a candidate in time.
Hill previously said he would “probably die” before stepping down from the bank but Metro insisted it was his decision to leave the lender he founded in 2010. He remains the bank’s ninth largest shareholder with a 3.6% stake, worth about £11m.
Hill’s tenure has been mired in controversy in recent years. It led to Metro Bank severing ties with the architecture firm owned by Hill’s wife amid criticism over £25m worth of payments made by the lender to her business. The lender has also faced pressure to overhaul its leadership after a misreporting error in January.
Metro Bank is still dealing with the fallout, which involved the misclassification of £900m worth of loans as being less risky than they were. The discovery meant the bank had a smaller capital cushion to protect it from a larger pool of risky loans in the event of a downturn. It prompted an investigation by financial regulators, which is ongoing and was recently widened to include Metro Bank’s senior managers.
The group’s shares have since been decimated, losing 90% of their value since the error was revealed in January, although they rose 10% on Wednesday, to 198p.
The bank has struggled to contain rumours about its financial position after a spate of negative news, including surprise plans to tap investors for another £350m and a 50% drop in its first-quarter profits. This was widely shared on social media, causing worried customers to queue at some west London branches to empty safety deposit boxes and withdraw cash.
Metro successfully completed its equity fundraising in May but was dealt a blow last month when it was forced to cancel a bond sale of up to £250m after failing to drum up interest from investors, despite offering a high interest rate of 7.5%.Its latest attempt, announced on Wednesday, is for a £300m bond sale at an even higher rate of 9.5%.
Metro Bank’s senior independent director Sir Michael Snyder, said: “Vernon is the inspiration behind Metro Bank, the first high street bank to open in the UK in over 100 years. It is thanks to his vision and leadership that we have grown to 70 stores around the country, serving over 1.8 million customer accounts and we’ve twice been ranked as the number one bank for overall quality of service for personal banking.
“The board shares Vernon’s view that Metro Bank has now reached a point where an independent chairperson is appropriate to oversee the next stage of our journey.”