Metro Bank has a limited future, claims co-founder

Metro Bank faces a "limited future" if it continues with its strategy of focusing on High Street branches, the co-founder of the bank has said.

On Sunday, Metro Bank agreed a deal to raise funds that it said would secure its future, after days of speculation over its financial position.

It also said it would continue to focus on bricks and mortar branches.

But Anthony Thomson, the bank's chairman from 2010 to 2012, told the BBC that was a "flawed strategy".

He said that the combination of pursuing a branch-based strategy given its financial position gave Metro "a very, very limited future"

"I would not like to be the chairman or the chief executive of Metro Bank today," said Mr Thomson, who after leaving Metro Bank set up Atom Bank - an internet-only company that has no physical branches.

When the financing deal was announced on Sunday, Metro's current chief executive, Daniel Frumkin, said the deal marked "a new chapter" for the bank.

The bank also reiterated its strategy of opening more branches. However, analysts have said this is expensive and runs counter to the trend of consumers switching to online banking.

Metro Bank was founded in 2010 in the wake of the financial crisis and was the first to open in the UK in more than 100 years.

It positioned itself as a so-called "challenger" bank to the big High Street names, with its promise of keeping branches open seven days a week. It currently has 76 branches.

However, the lender faced a major challenge in 2019 following an accounting scandal in 2019, which led to some top executives leaving the company.

Last week, the bank's share price slumped following reports that it was seeking to raise money from investors. This led to several days of speculation about the bank's future until the fund-raising deal was announced late on Sunday evening.

Mr Thomson said it was "terrible to see what's happened to such a great bank, and more importantly, a bank that had such a great customer franchise".

"It's been a huge success. from a customer perspective, financially, less so."

He said bank had "never really recovered" from the accounting scandal in 2019.