The Bank of London, a new clearing bank which boasts Lord Mandelson on the board, has raised £25m from investors after falling to a second annual loss.
The company, launched in 2021, raised fresh equity in November to meet regulatory capital requirements after winning a banking licence, filings show.
It won approval from the Prudential Regulatory Authority and Financial Conduct Authority last February.
Losses at the bank widened to £41.8m for the year ending December 2022 from £15.7 million, new accounts show. A hiring spree and spending on technology helped push the bank into the red.
Bank of London made no revenues during the period as the company was yet to officially start trading. It recruited its first client last April and is likely to show turnover when 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 to the Labour Party.
Mr Watson, 47, has handed thousands of pounds to Labour MPs and also advised the party on LGBT issues. He was awarded a CBE in the King’s Birthday Honours list last year for services to the LGBT community.
He previously worked at Barclays, Nike and founded a cryptocurrency startup Uphold.
Bank of London is aiming to challenge Barclays, HSBC, Lloyds and NatWest by offering clearing services to business customers. It boasts of being only the second clearing bank to launch in the UK in 250 years.
Challenger banks such as Monzo and Starling, who currently use the services of the Big Four, are also a possible hunting ground for the company’s tech platforms.
Attempts to disrupt the financial plumbing which underpins business banking have seen 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 roster of banking veterans, including former Goldman Sachs and Citi executive Harvey Schwartz, and venture capitalists.
The bank is backed by Mangrove Capital Partners and 14W, which both have representatives on the board.
Employee numbers jumped by 100 during 2022, leading to a doubling of staff costs from just over £7m to £20.4m.
Last year, the company said it closed a Series C fundraising which valued the bank at $1.1bn (£860m).
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Startup bank headed by Lord Mandelson raises £25m from investors