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The banking arm of luxury department store Harrods has been sold to challenger startup bank Tandem in what’s understood to be a multi-million pound deal.
The Harrods Bank brand will not continue as Tandem takes over the loss-making bank’s business, including loans, savings and current accounts. It will be interesting to see if Tandem is a good fit for existing customers who may well take pride in banking with such as prestigious name and may not resonate with a fintech startup.
The deal is an unusual move for a four-year-old startup, but could prove to be a very shrewd piece of business as it gives it instant access to a range of financial products, a banking license and revenue. Founder Ricky Knox said the deal will take pressure of Tandem to make money in the immediate future, but that it should help it reach profitability more quickly.
The acquisition will make it the most mature digital challenger bank in the nascent market, propelling it ahead of rivals with a near-£200m loan book and over £300m of deposits.
Reports that Harrods owner Qatar Holdings was considering a sale of the more than century-old bank surfaced earlier this year. Pre-tax losses at Harrods Bank grew to £8.4m 2016, the latest accounts available, from £4.9m the year before. Net income was £2.3m, up from £1.1m a year earlier.
The deal is subject to regulatory approval but no doubt Tandem’s fellow challenger banks such as Starling Bank, Monzo and Atom will be watching with interest.
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