Metro Bank targets £300m flotation to fuel growth

Metro Bank is targeting £300m from a stockmarket listing as the lossmaking "challenger" seeks to win customers from the UK's largest lenders.

The bank reported on Wednesday that it had opened more than 500,000 accounts since launch in 2010, after experiencing a 56 per cent surge in new customers over the past year.

Competition to win current account customers - who are moving banks faster by using the seven-day switching service - is heating up. Some of the largest banks are retaliating with the launch of more enticing offers.

Barclays last week unveiled a current account rewards programme that offers to pay up to £180 a year for a monthly £3 fee, while the Co-Operative Bank has waived a number of overdraft charges.

Craig Donaldson, chief executive of Metro, said the bank had "invested heavily" to enhance its services.

The bank saw total deposits grow to £3.4bn in the three months to the end of March, reflecting a quarterly increase of 18 per cent.

Lending increased to £1.8bn over the quarter, up from £1.6bn at the start of the year, of which almost half went to business customers.

However, the new bank continues to post a net loss of £8.5m after tax in the first quarter, down from £10.6m in the same period last year and £8.9m in the last three months of 2014.

Vernon Hill, chairman and founder of the bank, said that the loss reflected the bank's continued investment in people, infrastructure and technology as it eyed growth.

He told the Financial Times: "We've said we would plan to float next year - no one has ever grown a bank at these rates." The move could value the bank at more than £1bn.

"When we float, we aim to raise £300m, all to go into the business for growth." The bank has raised £640m from large institutional shareholders to date.

The lender is also bucking the trend of closing branches, opening one a month in prime locations to attract the most footfall, in spite of the high costs involved in running store networks.

A further seven UK branches are planned for this year at locations including Tunbridge Wells and Harrow.

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