Ex-Barclays Executive Plots New Business Bank
Sky News understands that OakNorth, which has secured backing from a group of prominent investors, is one of 20 fledgling banks which are pursuing licences from the Financial Conduct Authority (FCA).
OakNorth has been established by Richard Davies, who rose to become the head of UK operations within Barclays’ corporate bank before resigning last November.
He is being joined by a team including Chris Dailey, who was an executive at Aldermore, one of the new banks which have emerged in Britain in the aftermath of the financial crisis.
The emergence of lenders such as OakNorth comes at an important moment in the political debate about banking competition, with the Labour leader Ed Miliband vowing to make the creation of new banks a central plank of his economic policy.
Last summer, the FCA said it would relax capital and liquidity rules for new entrants to the banking market, two of the major obstacles for start-up banks to gain regulatory approval.
London-based OakNorth, which declined to comment further on its plans, intends to “focus on the entrepreneurial community in the UK – working with fast growing small and medium sized enterprises, property developers, high net worth individuals and venture capital firms,” according to a website it has set up.
“OakNorth will offer a wide range of lending and saving products to assist SMEs and investors in financing their future growth. The business model will seek to augment traditional banking practices with digital / new form lending techniques.”
Sky News has also learnt that Vince Cable, the Business Secretary, held talks earlier this month with a group of so-called challenger banks to discuss the hurdles confronting them.
Among those attending the meeting were executives from Aldermore, Metro Bank, Shawbrook and TSB, as well as Treasury ministers, regulators and the chief executive of Mr Cable’s new British Business Bank, which will become operational this year.
Mr Cable told Sky News: “New banks entering the market should be encouraged as they provide choice to customers and are an important source of finance for small businesses.
“Regulators have taken moves to improve the way they authorise new entrants, working closely with the banks and providing time for those that need to get staff and investment in place.
“They have reported an increase in the number of potential new banks they are in talks with, which is promising.
“However, most applications under consideration are for niche banks and to have meaningful competition we need banks with the significant technological platform, the kind TSB and Williams and Glyn received from their parent banks [Lloyds Banking Group and Royal Bank of Scotland.”
One of the executives who attended the meeting with Mr Cable said industry representatives had emphasised the need for new bank entrants to have access to robust technology platforms that were often prohibitively expensive to small start-up companies.
In a speech last week, Mr Miliband said that Britain’s banking market was “broken” and said Labour would, if it won the next general election, create at least two new credible competitors to the country’s five biggest lenders.
His pledge has sparked a row with the industry and political rivals, who have accused him of duplicating plans already being implemented through the creation of new high street players such as TSB.
Sky News revealed last month that Aldermore had raised £40m from two leading hedge funds ahead of a flotation this year, while Metro Bank had secured nearly ten times that sum in new funding.