LONDON, UK: City of London Group (COLG) has announced a capital raise of £11.4 million through a share subscription and a raise of up to £6.9 million through an open offer of new ordinary shares, as the company moves to establish a new UK SME bank, Recognise Bank Limited, a subsidiary of COLG.
City of London Group (COLG) expects that the capital raise will lead to the removal of deposit restrictions and the full authorisation of Recognise Bank by the Prudential Regulation Authority (PRA).
This in turn will enable Recognise to offer retail savings products to both personal and business customers.
The development of Recognise is central to COLG’s strategy and in part addresses the funding gap experienced by underserved UK SMEs. As announced in November 2020, Recognise was granted Authorisation with Restrictions (AwR) by the PRA, one of the first banks to be authorised post pandemic.
As previously reported, City of London Group (COLG) has been in the process of disposing of its interest in Milton Homes Limited. It anticipates this disposal exchanging contracts within the next few days.
Since November 2020, Recognise has launched four lending products and received over £750 million of lending enquiries, through commercial brokers, other intermediaries and directly from its relationship managers; and is executing against its goal of lending c£1.3 billion over five years.
Michael Goldstein, CEO of City of London Group (COLG), commented: “We are very pleased to have completed the final step for the PRA to lift the deposit restrictions for Recognise, a major milestone for both COLG and Recognise.
Becoming a fully authorised bank has been our primary objective for some time, and will enable us to deliver against our key strategic goals and growth targets. Since the launch of Recognise, the business has grown the employee base to 60 high calibre members and secured a strong executive team, led by Jason Oakley as CEO, who between them, have over 200 years banking experience.
“This latest capital raise and expected sale of Milton Homes will enable us to realise our strategic ambitions for Recognise Bank, namely increasing the size of the loan book with access to funding from depositors through our business and personal saving products. This has been our goal for three years, and the sale of Milton Homes will enable the group to streamline its focus on the next stage of Recognise’s growth.
“The latest fundraise demonstrates the support that we enjoy from shareholders for our ultimate strategic goal, to build the UK’s leading SME Bank, supporting the needs of local businesses.”
City of London Group Plc share price
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23 Aug, 12:44 pm GMT+1 ·Disclaimer