Bank founded by Tory party donor awarded licence
A challenger bank founded by a multimillionaire Tory party donor has moved a step closer to trading after winning regulatory approval.
Redwood Bank, which was launched by David Rowland and his son Jonathan, has been awarded a banking licence from the Financial Conduct Authority and the Prudential Regulation Authority.
The lender plans to open up to customers later this year and will offer business banking products to property investors and small and medium sized firms, including deposit accounts.
The father-and-son team created the holding company Redwood Financial Partners (RFP) to kick-start the bank, after seeing a gap in the market for small firms struggling with access to finance.
The regulatory boost comes as Warrington Borough Council took the unprecedented step of becoming a major shareholder in the lender by snapping up a 33% stake in RFP.
The £30 million injection is said to be the first investment of its kind for a borough council and is part of the bank's £50 million proposed capital funding.
Co-founder Jonathan Rowland said the lender would make several board-level appointments in the coming weeks.
He said: "Securing a banking licence by the PRA and the FCA underlines the strength of our business model and the calibre of our experienced management team.
"With the opportunities being created by Brexit and the financial services sector's rehabilitation, this is a great time to be entering the market.
"We extend a warm welcome to Warrington Borough Council as a new shareholder in Redwood.
"It's clear that the council shares our vision to create a robust, secure and profitable bank that is not only well placed to deliver strong returns but also to stimulate sustainable economic growth in Warrington and the surrounding area ."
Redwood Bank will have its headquarters in Letchworth, Hertfordshire.
It will also open a regional office in Warrington to drive lending in the North West.
Gary Wilkinson, chief executive of Redwood Bank, said the firm had made "considerable progress" in building its infrastructure and had recruited an experienced management team.
David Rowland is a property magnate who turned down the opportunity to become the Conservative Party treasurer in 2010.
His son Jonathan played a lead role in the restructuring and recapitalisation of the Luxembourg arm of Icelandic bank Kaupthing, which was demerged into Banque Havilland and Pillar Securitisation.