Tandem buys Harrods Bank: what this means for customers
Digital challenger Tandem has struck a deal to buy loss-making Harrods Bank. Here’s what the move means for existing customers of the luxury brand.
Crowd-funded, digital banking firm Tandem has announced it has signed an agreement to acquire 100% of Harrods Bank.
The transaction is subject to regulatory approval and while the financial terms haven’t been disclosed, Tandem confirms it will benefit from £80m of capital coming into the business.
The start-up expects to receive regulatory approval by the end of the year and the move should also see Tandem fast-tracked down the process to offer deposit accounts, again expected in Q4 2017.
This is because it is buying a bank which already has a full banking licence. So given a nod from the regulator, Tandem will be able to move from an app tracking spending, credits and financial services switching, to one offering a range of banking services.
Harrods Bank was put up for sale in April and has made more than £13m of losses over the last two financial years while lending around £200m in 2015 and 2016.
It lost £4.9m in 2015 and £8.4m in 2016, with analysts suggesting much of its value was attached to its prestigious name.
Ricky Knox, Tandem founder, said: “Tandem has been built from the ground-up with the help of over 11,000 co-founders, who have helped us shape products and services that really make a difference to their lives. This acquisition will allow us to scale the business and ensure we can introduce as many people as possible to a new way of banking.”
What does the sale mean for existing Harrods Bank customers?
Tandem Bank was unable to confirm how many Harrods Bank customers were affected by the sale. However, Harrods currently offers savings products, residential and buy-to-let mortgages, international money transfers and a bullion service.
When asked what this will mean for existing customers, whether they need to do anything and whether existing terms of products would remain the same, it told YourMoney.com: “The full range of services to be offered is currently subject to review. Existing customers will be first to know should there be any changes. Should there be any changes, Tandem will work closely with customers to ensure a smooth transition.”
Once the deal is approved and finalised, both businesses will operate under the Tandem brand. Since Harrods Bank already has a full banking license, customers will be afforded the same protections as they currently receive under the Financial Services Compensation Scheme, Prudential Regulation Authority and Financial Conduct Authority.
Tandem’s app is available in the app store. It added that its credit cards are currently being tested by the co-founders and it aims to launch these more widely in the coming months.