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The Bank of London is beneath scrutiny on two fronts from regulators as its auditor warned that there have been “materials uncertainties” over whether or not the ailing fintech might proceed buying and selling.
Regulators on the Financial institution of England’s Prudential Regulation Authority have put the clearing financial institution beneath so-called enhanced supervision attributable to inaccurate record-keeping, lax regulatory reporting and governance failures, TBoL disclosed in its monetary accounts that had been filed on Wednesday. The PRA has additionally launched a separate enforcement investigation into unspecified “historic” occasions, in accordance with the submitting.
The accounts, filed seven months late, had been certified by auditors at EY attributable to “insufficient historic information” regarding an worker share choice scheme. EY additionally flagged issues over whether or not TBoL “will have the ability to entry new funds accessible on the ranges required by future fairness capital elevating”, its means to execute its marketing strategy, and any “punitive outcomes” stemming from the PRA probe.
Enhanced supervision is when the PRA steps up its regular scrutiny of a financial institution after persistent regulatory issues. An official investigation, in the meantime, can result in a fantastic on the establishment or key people.
The TBoL accounts additionally confirmed losses of simply over £12mn for the yr ending December 2023 and detailed “vital turnover of employees”.
The disclosures cap a heady 12 months for the fintech, which achieved a $1.1bn “unicorn” valuation in 2021 and till final yr boasted grandees Lord Peter Mandelson and US non-public fairness boss Harvey Schwartz on its board. TBoL was thrust into the highlight in September by a winding-up order from UK tax authorities over unpaid debt. HM Income & Customs later withdrew the petition however questions over TBoL’s monetary well being remained.
The financial institution instructed potential traders earlier in 2024 that it had an “quick” want to lift thousands and thousands of kilos for regulatory capital, the Monetary Instances previously reported. TBoL additionally mentioned it had ready plans for a solvent wind-down in case the fundraising was not profitable.
The financial institution then obtained a capital injection of £52.1mn from a bunch led by present investor Mangrove Capital, whose founder, Mark Tluszcz, can also be a non-executive director on the financial institution. The financial institution secured an extra £25mn from Mangrove earlier this month, in accordance with a TBoL spokesperson.
Since final yr’s fairness increase, each Mandelson and Schwarz have give up. The financial institution’s founder and chief government, Anthony Watson, left days earlier than the capital injection was introduced. The brand new CEO is Christopher Horne, a former Credit score Suisse government.
Based in 2016, TBoL goals to earn money from licensing its expertise to company purchasers to allow them to supply regulated banking providers beneath their very own manufacturers. It claims to be proof against financial institution runs as a result of it parks deposits on the central financial institution fairly than lending them out.
Rolling again on its enlargement, the financial institution’s new administration workforce has lower its headcount from a peak of about 200 to barely greater than 100.
Because the finish of 2024 the financial institution has refiled quite a few paperwork, together with shareholder lists and fairness injections, which needed to be amended after earlier filings had been discovered to comprise incorrect data.
Regulators had additionally obtained a proper grievance concerning the financial institution’s governance, together with issues round employees turnover and the vetting of recent workers, the Monetary Instances beforehand reported.
TBoL didn’t give particulars of what the PRA was investigating.
The fintech is co-operating with the PRA and can also be endeavor its personal inside investigation, in accordance with the accounts.
The PRA declined to remark.
TBoL mentioned in an announcement: “These accounts relate to a monetary yr through which the financial institution operated beneath fully totally different management.” It added that it had since launched into a “complete transformation”, and that its governance had been “drastically strengthened”.
Further reporting by Martin Arnold in London
