LONDON (Reuters) - New British bank OakNorth has been granted a banking licence and appointed former top regulator Adair Turner as its senior independent director.
The bank, which will focus on lending to small firms with high growth potential, said it would begin lending and taking retail deposits this summer. It plans to differentiate itself from other banks by accepting different types of collateral and not just property as security on loans to small businesses.
OakNorth will join a number of new entrants to the industry, looking to challenge the dominance of Britain's "Big Four" lenders - Royal Bank of Scotland (L:RBS), Lloyds Banking Group (L:LLOY), Barclays (L:BARC) and HSBC (L:HSBA).
"Fast-growing small and medium sized businesses play a pivotal role in the economy, but they find it more difficult to access finance in Britain than they would in many other countries, such as the U.S. or Germany," said Turner, who chaired the Financial Services Authority between 2008 and 2013.
"We see an opportunity to focus on this market of growth SMEs, be more flexible in the range of collateral we accept from them and invest in IT that improves customer service," he added, without giving further details.
It plans to lend over 1 billion pounds to businesses over the next few years. Bank of England figures show that net lending by banks to small firms fell by an average of 430.5 million pounds in each quarter last year.
Ratan Engineer, former chief financial officer at fund manager Invesco, will be chairman and Robert Burgess, former chief executive of Alliance Trust (LONDON:ATST) Savings, will be a non-executive director.
OakNorth was founded by Rishi Khosla and Joel Perlman, who set up financial research firm Copal Amba before selling it to Moody's.