UK neochallenger Bank North declares insolvency

By Gaia Lamperti

October 03, 2022

Bank North
Digital Banking
Insolvency

Bank North, the Manchester-based neochallenger banking startup, is to declare insolvency after failing to secure a new funding round. The company was trying to secure £30 million to get a full banking licence from the Bank of England but, in a letter to the bank’s shareholders, Board Chair Ron Emerson stated the firm had failed to find the capital within the required timeframe.

“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,” Emerson wrote. “The inability to raise further investment is a disappointment, albeit not unexpected given previous fundraising challenges along with the gathering uncertainty in investment markets.”

The stricken bank is reportedly in talks with ad third party to sell its £17 million loan book and transfer its Manchester-based lending team – about a third of its 60 staff – in a bid to reduce job losses. “Completion of this transaction is critical to ensuring a solvent wind-down, where the priority will be to ensure full payment of our creditors, including staff, and that all outstanding liabilities are paid,” Emerson added.

Bank North’s core purpose was to disrupt the SMEs lending market, and it managed to raise £20 million last year – including a £4.45 million investment from Estonian financial services firm LVH – and was granted a restricted licence by the Prudential Regulatory Authority. It also received a restricted banking licence from the UK Prudential Regulatory Authority (PRA) in August last year.

The liquidation of Bank North is another setback to Bank of England governor Andrew Bailey. Reports suggest that he is currently struggling to shore up confidence in the mortgage, pensions, and currency markets amid ongoing economic instability.

The move is also contrary to the UK Government’s ‘levelling up’ agenda for 2023 and beyond, as Bank North focused on plugging a gap in the regional lending market.

October 03, 2022