Metro Bank eyes 5-10 percent of London market

LONDON (Reuters) - Metro Bank, which will be Britain's first new High Street lender to launch in more than 100 years, has a long-term goal to grab up to 10 percent of the capital's retail and commercial banking market.

"It is a reasonable aspiration to say that, after 10 years, we will have between 5 and 10 percent of the greater London market," chairman Anthony Thomson told Reuters in an interview on Friday.

Metro Bank will open its doors to business and retail customers on July 29 amid a blizzard of publicity and marketing gimmicks such as biscuits for customers' pets and free breakfasts for clients.

The company is one of several new entrants seeking to break into a retail banking sector battered by the credit crisis and the near-collapse of some of its best-known names.

It is the first new start-up, however, to gain a licence from the Financial Services Authority regulator, and it says it will use an old-style branch network to attract customers and fuel growth.

Metro Bank aims to run more than 200 branches across greater London over the next decade and hopes to end up with a 50/50 split between retail and commercial banking, offering a full range of services including a Metro Bank-branded credit card.

Its business plan is largely inspired by the model used by its co-founder, billionaire Vernon Hill, when he founded America's Commerce Bank in 1973.

Commerce Bank grew rapidly to become a major force in the U.S. financial industry and was eventually sold to Canada's Toronto-Dominion Bank (TD.TO) in 2008.

Thomson said Metro Bank would follow Commerce Bank's traditional approach of taking in deposits and lending out a proportion of them.

He said this conservative approach would ensure Metro Bank would be protected against market downturns such as the 2007-2008 credit crisis that led to the nationalisation of British bank Northern Rock, which relied heavily on funding from the financial markets.

"We have no wholesale funding and no debt," said Thomson.

"We're about taking in deposits and lending a proportion of those. We don't expect to lend more than 75 percent of deposits."

POSSIBLE FLOTATION IN 2013

As investors prepare for the results later on Friday of "stress tests" European regulators have conducted on the continent's banks, Thomson added Metro Bank would be comfortably well capitalised.

"Our Tier 1 capital ratio will be in the very high teens," he said, declining to provide more specific details. According to documents seen by Reuters on Wednesday, regulators are looking for a minimum 6 percent Tier 1 capital ratio for banks by the end of 2011.

Thomson also reiterated that the bank could consider a stock market listing in 2013 to raise 250 million pounds in capital.

The company has currently raised 75 million pounds of capital, with funding coming from the likes of fund management firm Fidelity, property investors the Reuben brothers and New York City real estate developer Richard LeFrak.

Thomson said the company expected to employ around 1,000 people within three years. It currently has just over 100.

The changing British banking landscape is set to see various assets sold off from bailed-out groups Lloyds (LLOY.L) and Royal Bank of Scotland (RBS.L) that could attract the likes of Virgin Money and supermarket chain Tesco (TSCO.L), which also plans to enter the British bank sector.

However, Thomson said Metro Bank aimed to grow organically and had no interest in acquisitions.

"We're not interested in buying other people's problems."

(Editing by Will Waterman)