City of London Group losses slump to £5.8m despite growing popularity of subsidiary Recognise Bank
- Half-year figures for City of London Group revealed £5.8m half-year loss
- But firm’s SME-focused subsidiary Recognise Bank has been faring well
City of London Group slumped to a pre-tax loss of £5.8million in the six months ending 30 September, down from a loss of £2.6million the previous half.
The group said £5.6million of the latest half-year loss stemmed ‘from Recognise Bank, in line with its business plan, as it develops its business’.
In September, Recognise Bank, a SME-focused lender and subsidiary of COLG, had its deposit restrictions lifted by the Prudential Regulation Authority, enabling it to launch its personal and business savings products, and to start taking deposits.
Figures: The City of London Group slumped to a pre-tax loss of £5.8m in the six months ending 30 September
According to COLG, Recognise Bank launched its first personal savings products within two working days of receiving its full licence.
It added: ‘Both the market leading five-Year Fixed Rate account and 95-Day Notice account proved popular with depositors, attracting deposits of over £60million.’
COLG said Recognise Bank received over £1billion of lending proposals since November and partnered with over 60 commercial finance brokers.
COLG also said it raised £11.6million before expenses in September from shareholders, including two of its major shareholders.
It added: ‘The net proceeds, together with funds generated from the sale of non-core businesses and internally, have been invested in Recognise Bank to support its capital base and allow it to continue to focus on building its lending portfolio.’
Philip Jenks, chair of City of London Group, said: ‘We are delighted that our subsidiary, Recognise Bank, became a fully licensed UK SME bank in September when the PRA lifted all restrictions, so allowing entry to the UK savings market.
‘Recognise Bank successfully launched its first savings products within two days of this and is now in a position to drive forward its business plan and focus on meeting the future needs of the UK SME business sector.
‘In achieving a UK banking licence, we are indebted to the hard work and vision of the Recognise Bank team and also to the continuing support from engaged shareholders who understand the SME market and share our vision to deliver a successful, safe and sustainable bank deploying the latest technology.
‘The results for the six months reflect the costs incurred in developing the Recognise Bank business and are in line with the business plan.
‘During the six months, the divestment of the Group’s non-core businesses has been completed, subject to regulatory approval for the sale of Milton Homes. The run-off of the PFS and CAML/PFL portfolios continues to progress smoothly with future customer lending requirements being considered through Recognise Bank.
‘While uncertainties on the continuing impact of the COVID-19 pandemic remain, we believe the fundamentals in the UK continue to point to steady economic recovery.
‘Recognise Bank, which has no legacy book and a highly experienced management team, is well positioned to capitalise upon the opportunities this will offer. The funds invested in Recognise Bank to date will support future balance sheet growth as Recognise Bank implements its business plan and moves towards break even.’
In August, COLG sold its advice firm Acorn to Oaks Financial Services as its shifted the focus of its operations to its banking arm.