Startup bank led by Lord Mandelson raises £25 million from investors

The Bank of London, a new clearing bank with Lord Mandelson on its board, has raised £25 million from investors after posting its second annual loss.

The company, which launched in 2021, raised new equity in November to meet regulatory capital requirements after obtaining a banking license, the documents show.

It received approval from the Prudential Regulatory Authority and Financial Conduct Authority last February.

Losses at the bank rose to £41.8m for the year ending December 2022 from £15.7m, new accounts show. A hiring spree and technology spending pushed the bank into the red.

Bank of London did not earn any revenue during the period as the business had yet to officially launch. The company signed its first customer last April and is likely to show revenue when its 2023 accounts are filed.

The clearing bank was founded by so-called Insta-banker Anthony Watson, a high-profile LGBT campaigner who has previously donated money to the Labor Party.

Watson, 47, has handed over thousands of pounds to Labor MPs and has also advised the party on LGBT issues. Last year he was awarded a CBE in the King’s Birthday Honors list for services to the LGBT community.

He previously worked at Barclays, Nike and founded cryptocurrency startup Uphold.

Bank of London wants to challenge Barclays, HSBC, Lloyds and NatWest by offering clearing services to business customers. It boasts of being only the second clearing bank in Britain in 250 years.

Challenger banks such as Monzo and Starling, which currently use the services of the Big Four, are also a potential hunting ground for the company’s technology platforms.

Efforts to disrupt the financial system that underpins business banking have sparked growing interest from fintech companies, including rival startup ClearBank.

Lord Mandelson, former business secretary under Gordon Brown and architect of New Labour, is deputy chairman of the bank.

He sits alongside a selection of banking veterans, including former Goldman Sachs and Citi CEO Harvey Schwartz, and venture capitalists.

The bank is supported by Mangrove Capital Partners and 14W, both of which have representatives on the board.

The number of employees increased by 100 by 2022, resulting in a doubling of staff costs from just over £7 million to £20.4 million.

Last year, the company said it had completed a Series C fundraising, valuing the bank at $1.1 billion.

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