FSA Urges Metro Bank To Pursue Board Shake-Up
The City regulator is leaning on Britain's newest high street bank to strengthen its boardroom line-up following a tussle over the appointment of its billionaire co-founder as its next chairman.
I understand that Metro Bank plans to reshuffle its line-up of directors to assuage concerns expressed by Financial Services Authority (FSA) officials about the elevation of Vernon Hill to become its chairman, which was announced on new year's day.
Insiders say that Ben Gunn, an existing non-executive director of Metro Bank and a City veteran who has run Friends Provident, the life and pensions group, is likely to become the lender's new vice-chairman.
Lord Flight, the senior independent director at the fledgling bank, will relinquish that title but remain on the board as a non-executive director, according to people familiar with the plans being discussed by directors. The proposals are still subject to change, insiders said.
FSA staff are understood to have told Metro Bank that they wanted a more established banking and financial services figure, such as Mr Gunn, to occupy a more senior role on the board.
Sky News revealed last month that the FSA had objected to plans to appoint Mr Hill as Metro Bank's chairman for reasons thought to be connected to a probe undertaken by US regulators into Commerce Bank, another lender he founded. He was ultimately cleared of any wrongdoing.
A Metro Bank spokeswoman refused to comment on future board changes, but insisted that there had been "absolutely no conditions attached to the appointment of [Mr Hill] as Metro Bank's chairman" by the FSA.
Metro Bank had been in discussions with the FSA about appointing Mr Hill as its chairman for more than a year, with the regulator raising concerns about the fact that the co-founder was not sufficiently independent.
"Look at Royal Bank of Scotland and HBOS: they had independent chairmen but it didn't do them a lot of good," one insider said today.
Allies of Mr Hill also pointed to the extraordinary commercial success he had enjoyed in the US.
Metro Bank launched in July 2010, and has 15 stores open in London and the south-east. Since its first branch opened, the bank has registered more than 130,000 personal and business accounts, taken more than £500m in deposits and lent more than £150m. Metro Bank plans to grow to 200 stores in the Greater London area by 2020, and plans to pursue a listing on the stock market by the end of next year.
Craig Donaldson, Metro Bank's chief executive, said of Mr Hill's appointment as chairman that it was "the natural choice".
"His unrivalled banking expertise, coupled with his innate understanding of how to build a business based on customer satisfaction have been an incredible support since Metro Bank's inception. Vernon is best placed to be the Chairman of Metro Bank through its next stage of growth."