Bank North, a Manchester-based banking startup aimed at disrupting the UK’s £150 billion SME lending market, is set to wind down operations after failing to secure a new funding round.
The startup was seeking £30 million to obtain a full banking license from the Bank of England, which would have allowed it to accept deposits from retail savers. Last year, Bank North managed to raise £20 million, including a £4.45 million investment from Estonian financial services firm LVH, and was granted a restricted license by the Prudential Regulatory Authority.
However, in a letter to shareholders obtained by the Daily Mail, the bank’s chairman Ron Emerson announced that they were unable to secure the necessary funds to remain operational. He stated, “It is therefore with great regret that I have to inform you that… the board of Bank North has decided to initiate a solvent wind-down of the bank, with immediate effect.”
The troubled bank is reportedly in discussions with an unnamed third party to sell its £17 million loan book and transfer its Manchester-based lending team, which comprises about a third of its 60 employees. Emerson noted that completing this transaction is “critical to ensuring a solvent wind-down,” allowing the bank to guarantee full payment of creditors, including staff, and to settle outstanding liabilities.