The Bank of London, a once high-profile fintech start-up that claimed unicorn status just four years ago, has revealed it is under investigation by the Bank of England’s Prudential Regulation Authority (PRA) and is facing questions over its long-term viability.
In long-delayed accounts for 2023, the clearing bank disclosed that the PRA is examining “certain historical matters” at the business and has placed it under “enhanced regulatory supervision” due to shortcomings in its financial and regulatory reporting. The bank’s external auditor, EY, issued a qualified opinion over concerns linked to the valuation of a staff share option scheme.
The revelations cap a turbulent period for the Bank of London, which was forced to slash its workforce by nearly half last year amid a severe funding crisis. Despite securing a £52.1 million capital injection led by Mangrove Capital in August 2023 — followed by a further £3.7 million — the company has warned of “material uncertainty” around its future funding, raising concerns over its status as a going concern.
The bank burst onto the scene in 2021 with lofty ambitions to disrupt the UK’s banking infrastructure and clear transactions more efficiently. It became only the second new clearing bank to launch in Britain in 250 years and claimed a valuation of $1.1 billion, backed by investors who granted it unicorn status.
High-profile names such as Lord Mandelson, now UK Ambassador to the US, and Harvey Schwartz, current chief executive of private equity giant Carlyle, held directorships. Both stepped down last October amid a broader boardroom shake-up triggered by the firm’s funding troubles. Founder Anthony Watson, who previously served as chief executive, also exited the business.
The bank’s workforce, which once numbered close to 200, now stands at around 100 following a restructure led by new CEO Christopher Horne.
A spokesman for the Bank of London confirmed that the PRA’s investigation relates to events before Mangrove’s takeover and that the business is fully cooperating with regulators. The PRA declined to comment.
Despite the scrutiny, the bank insists it has entered a new phase of stabilisation. A further £25 million commitment from Mangrove Capital investors has recently been secured, and the company claims it has “embarked on a comprehensive transformation”, including a new governance framework and reconstituted board aimed at restoring confidence.
The bank also faced questions last September after it was revealed that HM Revenue & Customs had filed a winding-up petition over unpaid tax. That issue has since been resolved.
Pre-tax losses at the Bank of London totalled £12.4 million in 2023, following a £12.8 million loss the previous year.
Once touted as a major challenger in the UK’s banking landscape, the Bank of London now finds itself navigating regulatory scrutiny, investor uncertainty, and reputational damage. Whether its latest leadership overhaul and fresh capital injections are enough to steady the ship remains to be seen.
