Mandelson-backed Bank of London reveals £42m in fresh funding days after winding-up petition

The Bank of London, the fledgling clearing bank backed by the Labour grandee Lord Mandelson, has announced it has raised another £42m from investors days after being hit by a winding-up petition by tax authorities.
The financial company said the oversubscribed funding round closed in August, and was led by Luxembourg’s Mangrove Capital Partners. Mangrove is an existing investor known for backing companies such as Skype. Its chief executive, Mark Tluszcz, sits on the BoL board.
It did not reference the tax debacle in the funding announcement, saying only that the investment would “position the bank for its next phase of growth in its core UK market”.
However, the news is likely to help quell concerns about the bank’s future, after HM Revenue and Customs lodged a winding-up petition against the bank in UK courts last Thursday. The company is not disclosing how much was owed, and it is unclear how long the taxes has been outstanding.
A source close to the BoL claimed the HMRC petition was because of an internal communication error about the tax it owed. They said the management team were unaware of the matter until last week, but that once it was discovered, it was fixed within hours.
A BoL spokesperson said the £42m fundraising pre-dated, and was unrelated to, the winding-up petition. They also said it was not linked to top-level turnover; the chief risk and compliance officer, Stephen Bell, took over as chief executive from its founder, the former Barclays executive Anthony Watson, last week. Watson will transition to a new role as a senior adviser and board member.
The bank has notable ties with the Labour party, with Watson having previously served on the party’s business and enterprise advisory council before the July general election. Mandelson, a former Labour cabinet minister under Tony Blair and Gordon Brown, also serves on the board as BoL’s deputy chair.
Commenting on the funding round, Tluszcz said: “The Bank of London’s ability to close an oversubscribed £42m funding round speaks to the confidence investors have in its leadership and unique model. The bank is well positioned to redefine the future of financial services and we are more than happy to support it.”
It is the first notable bout of turmoil for the BoL, which became the second clearing bank to enter into the UK market in 250 years when launched in 2021. Unlike traditional banks, such institutions do not offer loans, but instead provide clearing and settlement services for business customers, operating the plumbing that allows transactions and payments to take place.
The BoL says it targets “businesses with complex, international, or regulatory needs”, according to its website, which advertises that it can open accounts for unregulated financial companies in as little as 20 minutes.
Alongside another challenger, ClearBank, the BoL is hoping to disrupt the stronghold of the big four banks – NatWest, Lloyds, Barclays and HSBC – which are the most popular institutions for clearing services in the UK.
The BoL, which also has offices in Belfast, New York and North Carolina, was valued at $1.1bn (841m) in 2023, and has since grown a client base of 4,500 clients with £500m in deposits. It made headlines last year when it became one of the bidders hoping to take over Silicon Valley Bank’s UK arm during the mini banking crisis that gripped the industry in March 2023. However, SVB UK was eventually snapped up by HSBC for £1.
Bell said: “Our banking model is built on security and simplicity. By holding deposits at the Bank of England, businesses have full confidence in their funds being available at all times. Our success in completing this £42m funding round underscores investor belief and confidence in our vision, and I am excited to take over leadership of the Bank of London as it continues to grow.”