Metro Bank’s founder has resigned as chairman with immediate effect weeks before he was expected to step down, leaving his successor to handle a regulatory investigation into an accounting error.
The high street challenger said Vernon Hill, who founded the bank in 2010, would stay on as a non-executive director until 31 December.
He has been granted the honorary position of emeritus chairman in recognition of his “extraordinary contribution to Metro Bank”, the lender said in a regulatory announcement. Sir Michael Snyder, a member of the board, will serve as interim chairman until a replacement is found.
Hill will continue receiving his full chairman’s pay over the next two months, despite his scaled-down role, including a £10,000 monthly travel allowance.
The announcement was made before the publication of the bank’s third-quarter results on Wednesday afternoon. They showed a loss of £6.7m in the three months to September, compared with £900,000 in thesecond quarter . This was due in part to continuing costs linked to its “transformation and remediation programmes”, which are meant to cut costs and address its accounting error.
Metro Bank did not provide comparative figures for 2018, but said it swung to an underlying loss of £2.2m compared to a £15.1m profit last year.
The bank was also hit by £235m worth of deposit outflows from large business customers last month after it spooked markets by postponing a crucial bond sale.
Its chief executive, Craig Donaldson, said the bank was evaluating its future growth plans, signalling that it intends to reveal a fresh strategy when it reports its full-year results next year.
It has been a turbulent period for the bank, which is still awaiting the outcome of an investigation by City regulators after it classified £900m of loans as less risky than they actually were.
Metro originally announced in July that Hill would step down as chairman but stay on the board as a non-executive director and president. However, by the start of this month the plan had changed and it said he would step down from the board entirely by the end of the year.
The bank is trying to repair its reputation after a string of controversies, including the payment of £25m in fees to an architecture firm owned by Hill’s wife, Shirley.
John Cronin, a financial analyst at the stockbroker Goodbody, said: “While we don’t know what is behind the early departure, we have heard the murmurs around regulatory discontent in the context of Hill remaining on the board. Of course, Hill may have simply just had enough.”
Snyder said: “The board thanks Vernon for his vision, which inspired and created Metro Bank 10 years ago. He leaves a lasting legacy of creating fans through exceptional customer service, and has revolutionised British banking.”
Hill said he wished Metro Bank customers, shareholders and colleagues “every success for the next stage of the journey. As always, the best is yet to come.”
• This article was amended on 24 October 2019 because Metro Bank’s pre-tax loss of £900,000 was for the second quarter of 2019, not last year’s third-quarter results as an earlier version said.