The news follows a turbulent year for the bank whose shares have fallen as much as 90% since it disclosed a major accounting error in January. Its troubles intensified last month when it had to ditch a 250 million pound bond issue after failing to attract investors despite offering a hefty yield.
Metro successfully relaunched the bond sale on Wednesday at a higher yield of 9.5%, fulfilling an obligation to raise more regulatory capital by the end of the year.
The lender's shares, which rose 6% on the news of Hill's exit, rose as much as 31% by 1210 GMT after the bank said it had received orders worth 475 million pounds for the 300 million pound bond.
The bank had said in July that Hill, a U.S. entrepreneur who was the public face of the bank, would step down as chairman once a successor was appointed.
Metro Bank said on Wednesday that if the search for a new chairman was not completed by the end of the year an independent non-executive director would take on the role on an interim basis. Hill will also step down from the board.
A Metro spokeswoman said Hill would not be making any comment.
Hill built a reputation in the United States and in Britain for taking on the banking industry by rolling out customer-friendly branches with brightly coloured decor that stayed open longer than competitors.
He referred to customers as fans and regularly posed with his dog Duffy in publicity shots for the bank.
But Metro's strategy of opening branches seemed at odds with a broader industry shift towards digital banking and Hill upset Metro Bank shareholders in Britain last year over payments made to an architecture company owned by his wife Shirley.
Hill had already attracted scrutiny in the United States over the use of the design company run by his wife at U.S. lender Commerce Bancorp. Commerce Bancorp was ultimately acquired by Toronto Dominion Bank.
“We hope this change in leadership will help the Board draw a line under the governance issues at Metro Bank and focus on restoring shareholder trust and improving financial performance," said Ashley Hamilton Claxton, head of responsible investment Royal London Asset Management, a Metro Bank shareholder.
"The negative profitability impact for Metro Bank will only accelerate the need for a wider strategy recalibration and, potentially, further asset sales post-Brexit," said John Cronin, analyst at Dublin-based broker Goodbody.
(Reporting by Lawrence White and Abhinav Ramnarayan, editing by Sinead Cruise/Louise Heavens/Jane Merriman)
By Lawrence White and Abhinav Ramnarayan
