Metro Bank has revealed plans to cut 20% of its workforce and slash its business hours commitments as part of efforts to save it from collapse.

The struggling challenger lender, which announced a £30m cost-cutting plan last month, said it was now targeting £50m in annual savings amid wider efforts to shore up its balance sheet.

It employs about 4,000 staff, meaning it expects to lose around 800 people under the plans.

Metro, which earlier this week received shareholder approval for a £925m refinancing and recapitalisation plan, is also in talks to sell a £3bn mortgage book.

Sky News revealed exclusive talks with Barclays earlier this week which, if successful, would strengthen its capital position further.

Metro said the cost reduction action was expected to be completed early in 2024.

It forecast a a one-off charge of up to £15m which, a statement said, would be booked in the current financial year.

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The bank, which was founded in 2010, has about 2.7 million customers and 75 branches in the UK.

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Metro’s business model has been to offer branch services as major lenders focus on closures and digital banking

It has looked to capitalise on public anger over high street branch closures by mainstream banks since the financial crisis by focusing purely on branch services – opening seven days per week.

However, it has struggled to recover from a blunder in 2019 that saw £900m in loans mis-classified, sparking an investor and deposit outflow at the time.

“Whilst the company remains committed to stores and the high street, it will transition to a more cost-efficient business model, investing in automation for service and back-office operations and improving digital channels, particularly for deposits,” the bank said on Thursday.

“The company is reviewing seven day opening and extended store hours across the store network and is in discussions with the FCA [Financial Conduct Authority] about the customer implications of any such changes.

Metro said the cost-cutting plan would not affect its growth areas.

The statement continued: “The company continues to seek sites in the North of England for new stores as previously communicated.

“Metro Bank will also take action to simplify its operations and selectively streamline lending to focus on relationship banking and maximise risk-adjusted returns on regulatory capital.”

Separately, it announced that three board members would step down at the end of the year, leaving the board with five non-executive and two executive directors.

Shares, which have collapsed since 2019, were down by more than 60% in the year to date ahead of the update.

They rose by 5% in early deals.