Bank North sells lending business to LHV UK as it winds down operations
Bank North, a challenger bank for small and medium enterprises (SMEs) in the UK, has reached an agreement on the sale of its lending business to fellow challenger LHV UK.
Start-up venture Bank North has recently failed to raise enough capital to progress with its bank licence application, and as a result it is shutting shop. LHV UK, in the meantime, is progressing with its application to obtain a full banking licence in the UK.
LHV UK’s parent, Estonia-based LHV Group, is among Bank North’s investors.
Ron Emerson CBE, chair of Bank North, comments that, “as an investor, LHV have conducted themselves impeccably and have demonstrated real empathy for SMEs and a genuine understanding of the Bank North lending proposition and vision”.
He adds that the sale agreement followed “a competitive and independently managed process”.
LHV UK will acquire Bank North’s entire £17.9 million loan book and technology systems for managing the loans.
The start-up says it has built technology which enables it to streamline the lending process and approve loans to local businesses as much as ten times faster than the competitors. Its tech suppliers are Mambu and nCino.
LHV is working with fellow Estonian firm Tuum (formerly ModularBank) to implement the latter’s core banking system for the UK operations. LHV is also an investor in Tuum, whilst, in turn, Tuum is its banking client.
The proceeds of the sale will be used by Bank North to settle creditors as part of its solvent wind-down process. No third-party financing is needed for the transaction, LHV UK says, and there will be no changes to the business model once the transfer is complete.
Bank North’s 20 employees and cooperation agreements with commercial brokers will also transfer to LHV UK.
Manchester – home of Bank North – will become LHV UK’s third hub in the UK, in addition to its London-based head office and Leeds-based development and engineering hub. LHV says it “has placed high importance on the regional development of the UK’s fintech sector”.