Metro Bank is launching a fresh cost-cutting drive after the embattled lender clinched a £925m rescue package from investors over the weekend. The high street lender said it was aiming to slash about £30m of costs a year from 2025 as part of the deal, which avoided a potential breakup or takeover by a rival UK bank. It was not immediately clear whether those cuts would result in job losses among its 4,000 employees, including those who work across its 76 branches. However, given that staff costs are about 45% of the bank’s total costs, the Shore Capital analyst Gary Greenwood said he “would be surprised if some of the cost cutting doesn’t involve employee impact”. Metro Bank declined to comment. Metro, which became the UK’s first new high street lender in 150 years when it burst on to the scene in 2010, also confirmed overnight that customers had started to pull their money out in recent days amid worries over its financial health. However, the lender said it still expected current account balances to grow, “notwithstanding the recent increase in deposit outflow rates in advance of the announcement of the capital package” on Sunday night. In total, the rescue deal involves £600m of debt refinancing, on top of a £325m capital raise, which includes £150m of new shares sold at 30p a share. It is also planning to sell off about 40% – or £3bn – of its mortgages to reduce the risks on its balance sheet by the end of the year. That is on top of a shift to “specialist mortgages and commercial lending”, which is likely to involve buy-to-let mortgages. Shares rose 11% on Monday to 50p a share, after news of the financing package, which helped it avoid an emergency takeover by a rival UK bank. Metro, which was co-founded by the US billionaire Vernon Hill, will come under the control of another wealthy businessman: the Colombian billionaire Jaime Gilinski Bacal. Bacal’s investment vehicle, Spaldy, offered the bank £102m to boost his stake from 9% to 53% as part of the deal. The Metro Bank chief executive, Dan Frumkin, will also plough up to £2m into the lender as part of the rescue deal, a sum that surpasses his £1.3m total pay package for 2022. The chief financial officer, James Hopkinson is also poised to buy up to £60,000-worth of shares. Frumkin said the deal was supported by most shareholders, who “realised the missing ingredient was a bit more capital, and they were happy to provide it”. “There is nothing wrong with the Metro business model,” he told analysts during a call on Monday morning. “This bank is profitable, will be profitable and its profitability will grow,” he added. “We just need to be bigger, and we now have the capital to do that”, Frumkin said. Over the weekend, the Bank of England had deployed EY to sound out big lenders, including NatWest and JP Morgan, about potentially buying the whole of Metro Bank. HSBC, Santander UK and Lloyds were also reportedly approached for a potential sale. While some of the lenders are still considering buying Metro’s mortgage book, most ruled out a full-scale takeover. Some said this was due to the additional capital needed to shore up its finances, while others were wary about taking on its costly branch network. Frumkin said on Monday that Metro’s mortgage book had attracted “genuine interest” from “a range of names”, telling a Barclays analyst on a public call that those names were “not dissimilar to the one that’s on your pay cheque”. However, the chief executive said the bank would hold out for a fair deal, and would not consider taking a 5-10% hit on its “high quality” mortgage book. Metro had just started to recover from the turmoil caused by an accounting scandal in 2019, but fears over its overall financial health arose last week when it emerged that Metro needed hundreds of millions of pounds from investors to shore up its balance sheet. It was partly the result of Metro having failed to convince regulators it could be trusted to hold less cash against its mortgage risks in September, resulting in a sell-off in shares that plunged 50% in the weeks that followed. Without the concessions from regulators, Metro was operating at the edges of its capital requirements, which are meant to offset mortgage risks and cover unexpected losses. Had it failed to secure fresh funding, Metro could have been forced to slow or pause lending, ultimately harming its future profits. Jitters over Metro’s future sent shares tumbling 25% last Thursday to record lows of 34p. But shares bounced by 20% a day later amid hopes of a potential capital deal with investors. Frumkin said in a statement on Sunday night that the capital injection marked a “new chapter for Metro Bank, facilitating the delivery of continued profitable growth over the coming years”. “Our strong franchise is underpinned by our loyal customer base and engaged colleagues and we will continue to develop the Metro Bank offer to provide the digital and physical banking services our customers expect. We thank our shareholders and noteholders for their continuing support of Metro Bank and our customers,” he added.