The Bank of London is reportedly under investigation by the Prudential Regulation Authority (PRA), raising serious concerns about its long-term ability to maintain operations.
The probe, disclosed in the bank’s recently filed accounts—submitted months behind schedule—centers on “historical matters” predating a significant ownership change in 2024.
Auditors from EY have flagged these developments as creating “material uncertainties” that could jeopardize the bank’s ability to continue as a going concern, casting a shadow over its future.
Last year, the bank transitioned to new ownership under Fellesskap Group & Holdings, marking a pivotal shift in its structure.
While the financial impact of the ongoing regulatory investigation remains unclear, EY’s warning underscores the potential severity of the situation.
The auditors noted that the costs and outcomes tied to the probe could significantly disrupt the bank’s operations, though specifics about the investigation’s scope have not been publicly detailed.
Founded in 2021, the Bank of London has positioned itself as a challenger in the financial sector, competing with established institutions in clearing and settlement services, offering transactional banking for corporate clients, and providing banking-as-a-service solutions for businesses integrating payment systems.
Despite its growth plans, the bank remains unprofitable, reporting losses even as it has attracted over 4,500 business clients and accumulated more than £500 million in client deposits.
The past year has been particularly challenging for the bank.
In September 2024, it faced a winding-up order from UK tax authorities over unpaid debts, an incident the bank attributed to an “administrative error.”
This setback coincided with the departure of founder and CEO Anthony Watson, who stepped down just days before the tax issue surfaced.
The bank insisted that Watson’s exit was unrelated to the tax dispute, but the timing led to speculation about internal issues.
In response to these challenges, the Bank of London secured £60 million in new funding, paving the way for its ownership restructuring under Mangrove Capital Partners’ leadership.
The capital injection also facilitated the appointment of a new board and a successor to Watson, signaling an effort to stabilize the organization.
However, the regulatory probe and auditor concerns suggest that the bank’s path to recovery remains uncertain.
The Bank of London’s ability to navigate this turbulent period will depend on its capacity to address the PRA’s concerns, manage potential financial liabilities, and maintain confidence among its clients and investors.
For now, the bank’s leadership is tasked with helping the institution through a complex landscape of regulatory oversight and operational challenges.
As the investigation carries on, stakeholders will closely monitor developments, particularly how the bank addresses the “significant doubt” raised by its auditors.
The outcome of this probe could not only shape the Bank of London’s future but also influence perceptions of emerging players in the UK financial services sector.
