Metro Bank claims early success in fight for customers

Click to follow
The Independent Online

Metro Bank yesterday claimed to have beaten its target for new account openings this year in the space of just a month.

But the bank, one of a plethora of new market entrants sparked by widespread public fury at the existing operators and their behaviour during the financial crisis, declined to give any figures. The company said it planned to create 100 new jobs as it gears up for further new branch openings in the wake of the second outlet, in Earls Court, opening its doors. The company aims to have four branches in operation by the end of the year and have 12 open by the close of 2011 followed by another 12 outlets in 2012.

Chief executive Craig Donaldson said: "We don't want to put numbers out because it would alert our competitors, but we have opened the number of new accounts in our business plan for the first year inside the first month. We are interested in growing our business organically and we will build the bank one store at a time."

This would prevent Metro Bank, which also offers telephone and internet banking, from bidding for Egg, the internet bank and credit card business that Citigroup is thought to be keen to offload.

"That isn't something we would be looking at," said Mr Donaldson. Metro Bank, billing itself as the first new high street bank in 100 years, has opened its doors in a blaze of publicity utilising gimmicks such as making dogs welcome in branches, which it prefers to call "stores".

One of its founders, Vernon Hill, has a proven record of successfully launching new banking businesses in the US, where he opened four new banks and grew one, Commerce Bank, from a single branch in 1973 to more than 500 outlets.

Metro's aim for its UK business is to have more than 200 branches in the London area within a decade. However, Metro – and its fellow new entrants – have attracted a certain amount of scepticism in both the City and from consumer groups. Exane BNP Paribas analyst Ian Gordon has said he has no plans to alter any of his estimates on the main banks in response to the new entrants, suggesting their impact will be small.

A spokesman for Which described the debut of any new entrant into the market as "welcome" but noted that most of Metro's products were only "about average". The spokesman said: "Since the financial crisis the banking market has got a lot less competitive as concentration has increased, so any new entrants are welcome. Whether Metro Bank succeeds will depend on whether it can offer the high level of service it is promising."

Other new rivals include NBNK, set up by Lord Levene, and Sir Richard Branson's Virgin Money.