New UK bank loses license
(22 March 2017 – United Kingdom) New UK digital bank Tandem has lost its banking license after failing to secure funding from a Chinese conglomerate following concerns that the country’s regulator would reject the deal due to capital controls.
Tandem, which is set to launch in the coming months as a mobile app-based bank, was due to receive £29 million from House of Fraser, the UK department store chain that was bought by China’s Sanpower Group in 2014.
However, the bank said hat House of Fraser had pulled its funding due to “uncertainty about whether China’s State Administration of Foreign Exchange would approve the transaction”.
House of Fraser invested £6 million of a planned £35 million at the end of last year. But China subsequently imposed restrictions on outbound foreign investment in an attempt to curb capital outflows, which are exerting downward pressure on the renminbi.
The bank, co-founded by Ricky Knox, the entrepreneur, and Matt Cooper, a former director at Capital One, required the funding to take deposits and offer a wider range of retail banking services.
The funding setback for Tandem highlights a key challenge for the wave of new digital-only banks attempting to gain a licence to launch in the UK.
Tandem said it was still planning to unveil its app in the coming months, with the aim of helping people manage their money by categorising their spending. The bank is planning to offer credit cards later this year.
Knox said: “The only change for customers is that we will no longer be launching savings accounts in the short term.
“Our app will still help our customers manage their money better and actually find them cash, and our fair credit card will launch in a few months.”
He added that the bank would “be in a position to quickly reapply” for the full licence to offer savings accounts in the future.
Tandem said the partnership with House of Fraser would remain in place, with a view to making its financial services available to the department store’s multimillion customer base.
However, the group said it would restructure to reflect its narrower product offering.
The mobile lender gained its license from UK watchdogs in November 2015. That, allowed it to take customer deposits as long as it cleared a number of hurdles, such as raising sufficient capital, hiring a board and establishing robust technology systems within 12 months.
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