UK challenger Bank North collapses

Manchester-based neobank Bank North is winding down its operations with immediate effect after failing to raise the funds needed for a full banking licence from the Bank of England.

In a letter to the bank’s shareholders, board chair Ron Emerson stated the firm had failed to secure funding within the required timeframe as it looked to become a fully regulated bank.

Bank North received a restricted banking licence from the UK Prudential Regulatory Authority (PRA) in August last year.

The company was founded in 2018 and initially operated as a lender for small businesses in the UK. It went crowdfunding in November 2021 following a £24 million Series A earlier that year.

Writing on LinkedIn, Bank North co-founder Richard Baker, who left day-to-day operations last year but remained a shareholder, says: “Many of us had put our heart and soul into making Bank North the success it was – a specialist lender to support UK SMEs.

“The inability to raise further investment is a disappointment, albeit not unexpected given previous fundraising challenges along with the gathering uncertainty in investment markets.”

Baker additionally cites the failure to launch its savings business to UK customers despite having a restricted banking licence as “a further disappointment to its outsourced service providers”.

The challenger bank intends to “sell its loan book” and transfer “about a third of its headcount” as part of its wind down, Baker adds.

Another UK challenger, Dozens, announced its plans to close earlier this year. Australian challenger bank Volt also closed its doors in June this year, citing failure to raise sufficient funds.