Metro Bank’s long-serving chief executive Craig Donaldson will step down at the end December, capping a calamitous year for the UK challenger bank.
The exit of Mr Donaldson leaves the lender without a permanent chief executive or chairman, as it faces mounting pressure to win back investors’ confidence.
Dan Frumkin, a restructuring specialist who joined Metro as chief transformation officer earlier this year, will take over as interim chief as the bank prepares to announce a new strategy in 2020, it said in a statement after the UK stock market closed on Wednesday.
Mr Donaldson’s departure follows the announcement in October that chairman and co-founder Vernon Hill would also leave the board by the end of the year. The pair were central to Metro’s strategy since it was founded a decade ago with the ambition of disrupting the UK’s dominant high street banks.
However, it came under fire after the discovery of a reporting error at the start of this year and its shares, now down almost 90 per cent, have not recovered. The Bank of England and Financial Conduct Authority are investigating the bank and some of its senior managers over the circumstances leading up to the error that involved it miscategorising a large number of its loans when calculating capital requirements.
Mr Donaldson offered to resign on several occasions after the error was first disclosed, but was rebuffed by the bank’s board. On Wednesday, however, he said the bank was now “sufficiently strong for me to step away”.
Several people close to the bank said his exit was a “mutual decision”. They said Mr Donaldson had done a good job to stabilise Metro in the aftermath of the fiasco, but suggested the bank would benefit from a “fresh start” that would give it more credibility with investors.
John Cronin, an analyst at Goodbody, said: “At one level it’s a loss in the context of his vision, energy, enthusiasm and the impact on staff. But clearly the board didn’t want him to be the person communicating the revised strategy …I think his credibility [with investors] had just run out of road.”
Mr Donaldson’s temporary replacement, Mr Frumkin, joined Metro in September from Butterfield Bank, a Bermuda-based lender where he worked on a governance and balance sheet restructuring in the wake of the financial crisis. He also had senior restructuring roles at Latvia’s Parex Bank and the UK’s Northern Rock, and worked for Royal Bank of Scotland.
Michael Snyder, interim chairman of Metro, said: “My priority is to appoint a permanent CEO and to appoint new [non-executive directors] to the board who will bring even more retail banking experience.”
Metro said it will consider internal and external candidates for chief executive role. Headhunters at Korn Ferry are already leading the search for a new chairman, said two people familiar with the matter.
Mr Donaldson will continue to draw a salary and remain available as an “adviser” to Metro through his 12-month notice period. However, the bank said he would not receive any variable rewards for 2019 or 2020, while his unvested options related to years before 2018 “will be considered by the remuneration committee in due course”.
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