Metro Bank Regulatory News (MTRO)

26 February 2020

METRO BANK PLC

Legal Entity Identifier: 213800X5WU57YL9GPK89

Update regarding Capability & Innovation funding and Public Commitments

Metro Bank plc ("Metro Bank" or the "Company") today announces approved changes to its Capability & Innovation funding from BCR Ltd ("BCR") and associated Public Commitments.

Metro Bank's Revised Business Case, submitted to and approved by BCR, has aligned the Bank's commitments with its new strategy, also announced today. Metro Bank will return £50m of the original £120m it was awarded last year as part of the Capability & Innovation Fund Pool A award.

Metro Bank remains committed to bringing market-leading service to SMEs and injecting more competition into the market. With a reduced amount of £70m, alongside Metro Bank's own investment of ~£140m, the Bank will continue to transform the SME experience - through its market-leading service proposition, new stores opening in the North of England, and continued investment in its digital capabilities.

The Bank has already demonstrated its success in deploying Capability & Innovation funds to date. For example, in 2019, Metro Bank launched Business Insights - an in-app account insights tool for SMEs, MCash - an on-demand cash collection and delivery service, and opened its first store in the North, in Manchester.

Metro Bank's Public Commitments will now be updated as follows:

·; Metro Bank will continue to spend ~£2 of its own funds for every pound it receives from the Capability & Innovation Fund

·; Metro Bank will open a total of 15 rather than 30 stores in the North of England by 2025

·; Metro Bank will continue to build a range of game-changing digital capabilities to help SMEs thrive

·; Metro Bank will step away from more niche SME propositions that benefit a smaller group of SMEs, including secured lending transformation, virtual accounts and pooling; it will re-phase a further three initiatives to create near-term capacity for transformation.

Revisions to Metro Bank's Public Commitments are set out in the notes to editors below. Metro Bank's original and revised Public Commitments are available in full here: https://bcr-ltd.com/public-commitments/

Dan Frumkin, Chief Executive Officer at Metro Bank, said: "We're absolutely committed to bringing market-leading service to SMEs and injecting more competition into the market. We already support tens of thousands of businesses, and these funds will enable us to continue doing what we do best - bringing new products and services to more SME customers across the country in line with our community banking approach. With BCR's agreement, we're pleased to have been able to forge a new plan which delivers for SMEs that aligns with our new strategy."

The information contained within this Announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 and was authorised for release by David Arden, Chief Financial Officer.

Enquiries

For further information on this announcement, please contact:

Metro Bank PLC

Investor Relations

Jo Roberts

+44 (0)20 3402 8900

IR@metrobank.plc.uk

Media Relations

Tina Coates / Abigail Whittaker

+44 (0)7811 246016 / +44 (0)7989 876136

pressoffice@metrobank.plc.uk

Teneo

Charles Armitstead / Haya Herbert‐Burns

+44 (0) 7703 330269 / +44 (0) 7342 031051

Metrobank@teneo.com

ENDS

Revisions to Metro Bank's Public Commitments are as follows:

·; Commitment 1 (unchanged): We will radically transform the SME experience

‒ Our unique model is able to combine growth with remarkable levels of service quality. We're committed to staying in the top 2 for customer service in the CMA service ratings.

‒ At current rates, Metro Bank business banking customers are 30% more satisfied than the industry average.

·; Commitment 2 (unchanged): We will provide a 'Metro multiplier' to Capability & Innovation funding

‒ Metro Bank will spend ~£2 of its own funds for every pound it receives from the Capability & Innovation Fund.

‒ This committed co-investment will ensure that the Capability & Innovation funds have real impact, helping more SMEs benefit from better service and market-leading digital innovations and capabilities that bit sooner.

·; Commitment 3 (revised): We will open 15 new Metro Bank stores in the north by the end of 2025 (reduced from 30)

‒ Capability & Innovation funds will be used to fund frontline roles for 18 months to provide SMEs with the support and service they need.

‒ All stores will be open 7 days a week, early and late, offer in-store debit and credit card printing, safe deposit boxes and access to a Local Business Manager.

·; Commitment 4 (revised): In delivering our plans we will create ~300 new jobs in the north (reduced from 750)

‒ When combined with our Metro Multiplier, Capability & Innovation funding will directly support the creation of ~300 high quality jobs in the North by 2025. (Commitment to further job creation as part of business-as-usual growth plans removed.)

‒ Capability & Innovation funding will also support the creation of ~50 new apprenticeship roles in the North by 2025 (previously 100 by 2021).

·; Commitment 5 (revised): We will build a range of game-changing digital capabilities to help SMEs thrive

‒ In 2019 we launched an artificial-intelligence led insights capability for SMEs using our mobile app, helping them to understand their cash flow and forthcoming payment obligations better.

‒ In 2019 we launched a mobile cash pick up and drop off service, ensuring SMEs can save time managing their cash needs.

‒ In 2020 we will launch a truly straight-through business current account online application, enabling 100% of SMEs in the UK to benefit from the Metro Bank experience.

‒ In 2020 we will enable SMEs to manage tax submissions, bookkeeping, invoicing and receipts via mobile and online banking and help them link to their favourite cloud accounting platform.

‒ By 2022 (previously 2021) we will offer SMEs the UK's first end-to-end payments and accounts receivable solution that automatically reconciles with cloud accounting services, allowing businesses to get paid faster and save time.

·; Commitment 6 (revised): We will build the capabilities necessary to support larger and more complex SMEs

‒ Starting in 2019 we began to enhance our trade finance and foreign exchange capabilities to ensure that the 14% of SMEs that trade internationally can access the finance products they need to grow.

‒ In 2020 (previously 2019) we will offer SME customers the ability to accept direct debits, supporting the 12% of SMEs that rely on subscriptions and membership revenue from customers.

‒ In 2020 we will deliver balance sweeping capabilities to help SMEs better manage their liquidity

‒ In 2020 we will deliver a new SME overdraft proposition and a new Small Business Loan platform to ensure SMEs can get access to the finance they need in a matter of minutes. This will be followed in 2021 (previously 2020) by a new Revolving Credit Facility proposition.

‒ In 2021 (previously 2020) we will offer a market-leading commercial credit card proposition, offering SMEs a full suite of customisable limits and controls.

‒ Metro Bank will not launch a secured lending platform, and two elements of liquidity management capabilities in its original commitments

·; Commitment 7 (revised): We will help 8+ innovative UK SMEs scale by partnering with them to deliver our bid commitments (reduced from 10+)

‒ In delivering our bid commitments we will partner with 8+ UK SMEs, helping them scale next-generation innovations for business banking customers.

‒ This will expand the addressable market for these companies by more than 395,000 SMEs by 2025.

·; Commitment 8 (unchanged): We will provide BCR Ltd and our customers with unprecedented transparency on our progress towards delivering on our commitments

‒ In June 2019 we provided BCR Ltd with access to real time Microsoft Power BI dashboards, so it can track progress against agreed project milestones.

‒ Every quarter until our commitments are delivered, we will publish a "BCR Commitments Update" on our public website, so that stakeholders can monitor our progress.

·; Investing £70m (previously £120m) from the Capability & Innovation Fund will enable Metro Bank to win an additional 93,000 SME BCA customers by 2025 (previously 211,000), based on Frontier Economics' calculations. This equates to a 1.3 percentage point move in market share of stock (previously 2.9 percentage point). When combined with our 'business as usual' growth plans, Metro Bank will become an at-scale challenger with a 5.6% BCA market share of stock by 2025 (previously 8.3%), serving more than 395,000 customers (previously 610,000).

About Metro Bank

Metro Bank is celebrated for its exceptional customer experience. Its mobile app and online service achieved the top spot in the Competition and Market Authority's Service Quality Survey among personal and business current account holders in February 2020; the bank also ranked in the top two for overall service and store service for personal and business customers. It was awarded 'Best All Round Personal Finance Provider' at the Moneynet Personal Finance Awards 2019.

Offering retail, business, commercial and private banking services, it prides itself on giving customers the choice to bank however, whenever and wherever they choose. Whether that's through its network of stores open seven days a week, early until late, 362 days a year; on the phone through its UK-based 24/7 contact centres; or online through its internet banking or award-winning mobile app: the bank offers customers real choice.

The bank employs around 3,500 colleagues and is headquartered in Holborn, London.

Metro Bank PLC. Registered in England and Wales. Company number: 6419578. Registered office: One Southampton Row, London, WC1B 5HA. 'Metrobank' is the registered trademark of Metro Bank PLC.

It is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. Most relevant deposits are protected by the Financial Services Compensation Scheme. For further information about the Scheme refer to the FSCS website www.fscs.org.uk.

All Metro Bank products are subject to status and approval.