Metro Bank’s chairman Vernon Hill will leave the board by the end of the year, as the challenger bank continues to deal with the fallout from a major accounting error.

The announcement came as it launched a new bond sale, initially worth £300 million, a week after pulling a similar offer due to lack of interest from investors.

This week’s bond sale was oversubscribed, allowing the bank to raise £350 million to help meet regulators’ capital requirements.

In July, Hill announced plans to resign as chairman, but he had been expected to remain on the board as an independent director. A statement yesterday explained that he would leave the group by 31 December, with an existing independent director coming in as chairman a candidate could not be found in time.

Hill previously said he would “probably die” before stepping down, but a spokesperson insisted it was his decision to leave the bank he founded in 2010. He remains its ninth largest shareholder, with a 3.6 per cent stake worth around £11 million.

The lender has faced pressure to overhaul its leadership since a misreporting error in January, which involved the misclassification of £900 million-worth of loans as being less risky than they were. The discovery meant the bank had a smaller capital buffer to protect it from a larger pool of risky loans in the event of a downturn. This prompted an investigation by the Financial Conduct Authority, which was recently widened to include Metro Bank’s senior managers.

The bank has struggled to contain rumours about its financial position after a spate of negative news, including surprise plans to raise a further £350m and a 50 per cent drop in its first-quarter profits.

Metro successfully completed its equity fundraising in May, but was forced to cancel a bond sale of up to £250 million after failing to get interest from investors, despite offering an interest rate of 7.5 per cent.

Metro Bank’s senior independent director Michael Snyder, said: “Vernon is the inspiration behind Metro Bank, the first high street bank to open in the UK in over 100 years.”

However, he added: “The board shares Vernon’s view that Metro Bank has now reached a point where an independent chairperson is appropriate to oversee the next stage of our journey.”

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