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UPDATE 1-Metro Bank shares tumble to record low after weak earnings

Lawrence White

* Shares hit record low after profits, deposits fall

* CEO says bank hiring 'tens' of staff to fix problems

* 350 mln stg capital raise could require discount to succeed (Adds CEO quotes)

LONDON, May 2 (Reuters) - Shares in Britain's Metro Bank fell by a fifth on Thursday after it said its first quarter profits had halved and some depositors had withdrawn funds following a major accounting error disclosed in January.

Bank analysts downgraded their price targets for the upstart lender and warned of more tough times to come, as it battles to complete a 350 million pound ($457 million) capital raise in the second quarter against a difficult market backdrop.

Metro Bank shares were down by 18 percent by 0720 GMT, hitting record lows.

The company has lost more than 60 percent of its value this year following the disclosure in January of a misclassification of the risk weighting on a large book of loans, triggering regulatory probes and pressuring Metro to raise funds.

"It's been the most chastening experience of my career, a chastening experience for the organisation but people know we are taking this exceptionally seriously," Chief Executive Craig Donaldson told Reuters in an interview on Wednesday evening.

Donaldson said the bank is 'doubling the team' who work on assessing its risk weightings as it tries to establish what went wrong and prevent a repeat, adding tens of bankers to its staff.

The bank had no update on when it expects the results of twin regulatory probes by Britain's Financial Conduct Authority and Prudential Regulation Authority, Donaldson said.

Analysts and equity capital markets bankers expect the lender may have to offer a deep discount on its shares to complete the 350 million pound capital raise, and some said it may need to raise more funds after that, a notion Donaldson rebutted.

"We'll get this one done in the second half and then I don't expect to be talking about capital raises in the short term after that," he said. ($1 = 0.7655 pounds) (Reporting By Lawrence White Editing by Sinead Cruise/Keith Weir)