Matthew Field
3 min read
A bank founded by a major Labour donor is being investigated by the City watchdog after a year of chaos left it scrambling for cash.
The Bank of London, launched by Anthony Watson, and which previously counted Lord Mandelson as a director, is facing scrutiny from the Prudential Regulation Authority (PRA).
The regulator is said to be investigating “historical matters” at the bank, which suffered a boardroom exodus last year in the wake of it being hit with a surprise winding-up petition.
The investigation will mean the bank is subject to enhanced scrutiny by the regulator, which will scrutinise a string of past failings – such as gaps in its reporting system.
Details of the investigation emerged in its latest results, which also contained a warning from auditors EY over the bank’s ability to continue operating as a going concern.
Mr Watson, who has donated more than £500,000 to Labour, stepped down as the bank’s chief executive last September.
Lord Mandelson, now Britain’s ambassador to the US, and Harvey Schwartz, the chief executive of private equity giant Carlyle, also resigned from the board in October.
A spokesman for the Bank of London said: “These accounts relate to a financial year in which the bank operated under entirely different leadership.”
Since last year’s turmoil, the bank has secured £57m from its main investor, Mangrove Capital. It has also appointed a new board and chief executive, with Christopher Horne, a former Credit Suisse director, tasked with leading the business.
In its latest accounts, filed seven months late, the Bank of London reported it had fallen to a £12.4m loss in the year to December 2023. It also highlighted how it ran low on cash in early 2024, claiming the bank “required immediate additional capital”.
Bosses have since launched a restructuring of the business, which has resulted in the departure of more than 100 staff.
Tensions over the Bank of London first emerged in September 2024 when it was hit with a winding-up petition from HMRC, one of the most serious actions a creditor can take.
The filing took the bank unawares, which insisted it resulted from a “simple administrative handling delay”. The petition was later withdrawn.
Prior to his departure, the Bank of London had raised tens of millions of pounds under Mr Watson, a former Nike and Barclays executive. Mr Watson was also known for donating hundreds of thousands of pounds to Labour Party MPs, including Yvette Cooper, Peter Kyle and Wes Streeting.
The latest results also revealed that EY, the bank’s auditor, warned of a “material uncertainty” hanging over the company’s ability to continue as a going concern.
