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The Bank of London will cut nearly 15 per cent of its workforce as part of a wider restructuring of the fledgling bank that received £42mn from investors last month.
The bank, which counts US finance heavyweight Harvey Schwartz and Labour grandee Lord Peter Mandelson on its parent’s board, told staff this week that it would make redundant about 20 of its employees, including at executive level, said two people familiar with the cuts.
The redundancies come as the bank faces pressure from investors to overhaul its operations after it closed its fundraising, said four people familiar with the situation.
A restructuring of the company was discussed as one of the things that investors wanted before committing to the fundraising, said three people close to the bank.
The financing was led by existing investor Mangrove Capital, whose founder, Mark Tluszcz, is also a non-executive director at the bank. He did not respond to request for comment.
The deal was announced shortly after the bank’s parent company received a winding-up petition from tax authorities over unpaid debt, which came days after its founder Anthony Watson stepped down as chief executive.
The bank attributed the petition from HM Revenue & Customs to an “administrative error” and it has since been resolved. The bank said at the time that the fundraising was unrelated to the petition, which has been withdrawn.
The bank — which aims to make money from payment services and by franchising its technology to allow corporate clients to offer regulated banking services under their own brands — had in July called on investors for more money, saying it had an “immediate” need to raise millions of pounds of cash for regulatory capital, the Financial Times has previously reported.
A spokesperson for the bank said: “Following its successful fundraising and under new leadership, the Bank of London is focusing on its home market of the UK and aligning its resources to support its strategic objectives.”
“As part of this process, the Bank has launched a consultation that may result in a small number of roles being impacted, relative to the total number of staff across its three offices,” the person said, adding the “decision has not been made lightly”.
The company counted about 150 employees before the restructuring according to people familiar with the matter. The bank declined to confirm its total number of employees.
A technology investor called Nasser Hadadi played a key role in leading negotiations on behalf of investors, according to four people familiar with the situation.
Hadadi, who is a French citizen according to corporate filings, has invested a relatively small sum personally, one of the people added, but was chosen by some of the bank’s investors to represent their interests in discussions with management.
The departures, which will mainly affect UK-based staff, follow an initial round of job cuts in the US earlier this month, where the bank leases offices that sit largely empty in New York and North Carolina.
The Bank of London is separately being sued in the High Court in London by a technology company over alleged unpaid debts as far back as 2022. Court records show that Smart Trade Technologies, a provider of electronic trading and payments platforms, has demanded £1.46mn from the bank including interest and damages.
The claimant said in a lawsuit filed in May that the bank had signed up in 2021 for LiquidityFX, Smart Trade’s foreign exchange trading platform. But it claimed that while the Bank of London paid a set-up fee and for the first year of the service, the bank failed to make subsequent payments required under a five-year contract.
The Bank of London said: “This claim relates to a minor commercial dispute in respect of which we have a robust defence which we fully expect to succeed.”
Additional reporting by Robert Smith in London
https://www.ft.com/content/d82a959d-5c77-4486-9245-2ab5993727df
