Britain’s most challenged challenger bank has a new boss. After a two-and-a-half month search, Metro Bank has made interim chief executive Dan Frumkin permanent.

Metro’s new broom has more mess to sweep up than most, following the departure of chairman Vernon Hill amid a toxic combination of accounting whoopsies and governance worries. Cleaning up has become Mr Frumkin’s stock in trade: he did short stints at the nationalised banks Northern Rock and Parex Bank, preparing good bank/bad bank splits, before landing at Bermuda’s Butterfield Bank.

City types are as snooty about Mr Frumkin’s eight-year stint at an offshore bank as they are about traditional Bermudan office wear of shorts and white socks. Metro’s shares slipped 2 per cent on Wednesday.

But Butterfield Bank’s market cap dwarfs that of the diminished Metro, $1.8bn to £332m ($431m). Butterfield trades at twice tangible book value; Metro at 0.2 times. Mr Frumkin was part of a team that turned Butterfield around under private equity ownership and returned it to the public markets six years later. If he did the reverse at Metro — tarted up the bank for someone to take private — it would not be a bad result for shareholders.

Still, that task looks nigh-on impossible, and explains why Metro could not lure a higher-profile boss. At next week’s strategy update Mr Frumkin must set out how he plans to reconcile the irreconcilable.

The bank’s cost base is too high. A network of flashy branches, open all hours (by bank standards) is much of the problem. That is what helped Metro overcome current account switching apathy to attract customers in the first place, though. Close the branches and its savers are more likely than most to walk.

Growth is also hard to come by. Metro’s base of retail deposits and residential mortgages make it too much of a subscale Lloyds Bank. But capital constraints — and enhanced regulatory scrutiny — make it hard to pursue more persuasively the (riskier and) more profitable path of lending to small businesses and career landlords.

Finally, Metro must convince the City it is a different bank from the one that imploded last year. It has brought in new executives. Hard to persuade investors of wholesale change, though, without a wholesale board overhaul.

Metro’s stopgap chairman calls Mr Frumkin an “impressive CEO”. He will merit that epithet if he can turn Metro back from challenged to challenger.

Obstacles ahead

Pendragon, the UK’s largest car seller, needs more than just a safe pair of hands at the wheel given the difficult road ahead. But the appointment of experienced US executive Bill Berman as its new boss will still come as a relief for investors.

Mr Berman, chairman since last year, has to do more than tinker under the bonnet. An excess of second-hand cars to offload in the first half of the year means a near-certain full-year loss. Despite cost-cutting and a better second half, the company may need further restructuring before it can guarantee a return to profit next year.

Brexit and economic worries have conspired to keep car buying low. New car registrations were down 7 per cent in January, and almost 14 per cent for private buyers. Plans to end the sale of internal combustion engine cars by 2035 are another source of worry. While sales of electric cars are rising fast, demand is held back by the lack of charging infrastructure and concerns technology will quickly become obsolete. And the industry will take another knock if the government ends the grant it offers to buyers of vehicles with the lowest emissions.

Some still believe there is mileage in Pendragon though. Odey Asset Management has increased its stake recently — perhaps in the hope of M&A. Analysts at Berenberg value Pendragon’s solidly performing leasing and software businesses at £100m and £250m, respectively. Both could end up in the shop window.

There is certainly no mention of treacherous conditions from the new boss, who described Pendragon as “a company with great potential”. But then no good car salesman would point out the scrapes down the side of their motor while taking it out on to the open road.

Station spat

Physical newspapers are dying a slow death. The Telegraph is doing its best to make it a swift one instead. It has enraged newsagency chain WHSmith by refusing to raise the retailer’s cut in line with a price rise. That has cost the paper its shelf space in WHSmith’s shops in train stations.

This is somewhat unfair from Smith’s. The Telegraph’s pricing strategy matches that of other products sold in these train station stores: rather on the expensive side.

If the Smith’s spat hits Telegraph sales hard, at least there won’t be too much noise about it — the paper has withdrawn from official reporting of its circulation figures.


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