(Alliance News) - City of London Group PLC on Tuesday said key operating subsidiary Recognise Bank has wasted no time since getting its full banking license in September.
The new bank is focused on small and medium enterprises in the UK, and COLG said it launched its first personal savings products within two days of receiving its license.
The costs of launching Recognise Bank caused COLG's pretax loss to widen to GBP6.2 million in the six months that ended September 30 from a GBP4.0 million loss a year before.
Including discontinued operation the interim loss was GBP5.8 million, narrowed from GBP2.6 million. Of the GBP5.8 million loss, GBP5.6 million was attributable to Recognise Bank. In the comparison period, GBP2.8 million in costs were associated with getting the UK banking license. The company said the losses were in line with its business plan.
Since starting operations in November of last year - before it had a full banking license in place - Recognise Bank has received over GBP1 billion in lending proposals from a partnership network of 60 commercial finance brokers.
COLG raised GBP11.6 million in equity in September. This, combined with cash from the sale of non-core businesses, will be invested in Recognise Bank to build its capital base and lending portfolio, the company said.
"Recognise Bank, which has no legacy book and a highly experienced management team, is well positioned to capitalise upon the opportunities [UK economic recovery] will offer," said COLG Chair Philip Jenks. "The funds invested in Recognise Bank to date will support future balance sheet growth as Recognise Bank implements its business plan and moves towards break even."
COLG shares were down 2.6% at 47.24 pence on Tuesday afternoon in London.
By Tom Waite; thomaslwaite@alliancenews.com
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