Bank of London told investors it had ‘immediate’ need for regulatory capital

Unlock the Editor’s Digest for free

The Bank of London told potential investors it had an “immediate” need to raise £18.5mn of cash for regulatory capital, in a further sign of the financial pressures affecting the start-up bank.

In a July presentation, seen by the Financial Times, the Bank of London said it had an “immediate funding requirement” for £3.5mn by August 9 and an additional £15mn by August 31 to meet regulatory capital needs.

The fledgling bank, whose holding company board is chaired by US private equity executive Harvey Schwartz and includes Labour party grandee Lord Peter Mandelson, announced on Sunday that it had raised £42mn in fresh financing in August.

The announcement came after UK tax authorities last week filed a petition to wind up the Bank of London’s holding company, a move typically taken when a company is late settling its tax bill.

The petition sparked a scramble over the weekend to shore up confidence, with the Bank of London saying that its tax issue was the result of an “administrative” delay and that the money had recently been paid.

The board has in recent days attempted to reassure regulators after HM Revenue & Customs’ petition to wind up the company was made public on Thursday and its founder Anthony Watson stepped down as chief executive earlier this month.

The Bank of London has not disclosed how much money it owed to tax authorities but one person with direct knowledge of the situation said it had been operating on a “hand-to-mouth” basis until this latest investment round.

In an announcement on Sunday, the Bank of London said that its latest fundraising “will position the bank for its next phase of growth in its core UK market”, while a spokesperson added that it was unrelated to the winding-up petition from HMRC.

The Bank of London said in the July investor presentation that it was “building the only global full-reserve bank in the world”, noting that it was licensed as only the sixth “principal clearing bank in the last 250 years”. The group’s main UK banking entity received a full unrestricted licence from British regulators last year, having earlier been granted a licence with restrictions in 2021.

The presentation set out that in 2024 the company had lost £27mn on an earnings before interest, tax depreciation and amortisation (ebitda) basis, but projected that the bank would achieve a “monthly profit” by August 2025 and would generate more than £624mn in ebitda by 2030. Income was projected to grow from just £11mn in 2024 to more than £1bn in 2030.

The fundraising was led by Mangrove Capital Partners, a Luxembourg-based investor that previously invested in Skype and Wix.com, and whose chief executive Mark Tluszcz has sat on the Bank of London’s holding company board since 2018.

“I am very happy being the lead investor in the Bank of London and really believe they have an opportunity to play an important role in the UK banking sector,” Tluszcz told the FT. “Their technology is world-class and resulting cost advantages over incumbents is game-changing.”

The Bank of London declined to comment on the details of the presentation to investors.