Metro Bank has cancelled the bonuses of all its executive directors following a turbulent 2023.
The London-listed branch-focused lender was forced to be rescued from potential collapse by a major refinancing package and embarked on a restructuring involving around 1,000 job cuts.
As a result of its moves, Metro Bank made its first annual profit since 2018 after having lose £70.7m in 2022.
Announcing its full year results last month, Metro Bank added that it was expected to deliver a further £30m of annualised cost savings by the end of 2024 – on top of £50m already planned.
The bank said that its executives had qualified for just under 40 per cent of their bonuses because of its performance but that the remuneration committee had decided to not award any of it.
Metro Bank to focus on profits
In Metro Bank’s annual report Paul Thandi, people and remuneration committee chair, said: “2023 was a pivotal year for the bank.
“Whilst there were strong outcomes in relation to delivering operational changes whilst maintaining the focus on our customers and our colleagues, the bank nevertheless had to undertake a refinancing (capital raise) in November 2023 which raised additional capital the bank required to operate sustainably in 2024 and beyond.
“This meant that choices were required, which led to significant reductions in the cost base and colleague levels within the bank.
“As such, against this backdrop, the formulaic outcome under the 2023 balanced scorecard which drives the annual bonus outturn was 37.8 per cent recognising the mixed performance.
“However, given the context, management asked the committee to exercise its discretion to reduce this outcome to zero for executive directors and for those that had been executive committee members during the year.
“The committee accepted this recommendation, notwithstanding the broader achievements by the bank and its colleagues in 2023.
“A zero bonus payout was considered appropriate for the executive population as the bank continued to focus on returning to profitability and maintaining its capital position.”
No further pay rise for chief executive
The salary of chief executive Daniel Frumkin increased from £769,600 to £925,000 on January 1, 2024, but the committee said it would not rise again during the next year.
Metro Bank added that the budget for salary increases this year has been used to “support our customer facing and junior colleagues, enhancing pay ahead of the real Living Wage whilst continuing our fair pay approach”.
The annual report comes after Bank of England started to examine a claim that Metro Bank “pirated” a US company’s software and put customers’ data at risk.
Over the last 12 months Metro Bank’s share price has been slashed from around 100p to just over 30p today, giving it a market capitalisation of around £218m.