CIN.L Regulatory News (CIN)

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO CONSTITUTE INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

LEI Number: 2138003UW63TMQ5ZFD85

31 January 2018

CITY OF LONDON GROUP PLC

Banking licence strategy update

City of London Group PLC announced on 19 December 2017, that it was recruiting a team under the leadership of Jason Oakley, to start the process of obtaining a banking licence and creating a business with the purpose of offering a real choice in commercial, SME, bridging and development finance.

COLG is now pleased to announce that it has entered into a formal agreement with the team comprising Jason Oakley, Adrian Golumbina and Bryce Glover.

Under the agreement COLG is acquiring a 73% equity interest in Echo Financial Services Limited, a recently established company with no material assets or liabilities. The remaining 27% equity interest will be held by Jason Oakley, 15%; Adrian Golumbina, 10%; and Bryce Glover, 2%.

COLG will provide total additional funding of up to £2.5m. However, if COLG's Board determines that the joint venture requires further funding, then COLG and Jason Oakley will provide Shareholder Loans in equal proportions up to an amount of £1.5m (a maximum of £0.75m each).

COLG has put and call option arrangements over the equity interest held by the team. The maximum amount payable by COLG to acquire the equity interest held by the team is £5.4m, which will be satisfied in COLG shares.

The maximum potential commitment is £8.65m, of which £5.4m is to be satisfied in COLG shares and the remainder in cash.

As previously announced, Jason Oakley will subscribe £400,000 for 421,052 new COLG shares and Bryce Glover will subscribe £50,000 for 52,631 new COLG shares at a subscription price of 95p per share. The price per share was calculated when the agreement was announced in December 2017.

Michael Goldstein, CEO of City of London Group said "I am delighted that we now have a top quality delivery team in place, led by Jason Oakley, that is properly motivated and incentivised to build a first class challenger bank offering a real choice in commercial, SME, bridging, and development finance. There is a strong desire to break the banking oligopoly and this is further strengthened by advances in technology, making a "bricks & mortar" network of branches less significant as a barrier to entry. We are all very excited about the prospects of this business."

Editors Notes

Jason Oakley built the lending business of Metro Bank as Managing Director Commercial Banking & Mortgages from £65m to over £2.5bn in less than 3 years with an income stream of approximately £100m and market leading margins. Prior to this he was Head of SME for NatWest and RBS with over 3,000 relationship managers looking after over 1m clients and over £1bn of revenue.

Bryce Glover has operated at Board and Executive Committee level during a 36 year career focused on Corporate and Commercial Banking. He was MD of Commercial Banking at Alliance & Leicester/ Santander before joining Nationwide in 2009 as Director heading its Commercial Division running a £22bn lending portfolio. Bryce was Nationwide's Corporate Affairs Director from 2014 to 2016 and is an NED of Newcastle Building Society.

Adrian Golumbina has over 20 years' experience in finance and has a proven career as a Finance Director across several industry sectors: financial services, contract hire/leasing, and engineering. Having qualified with Grant Thornton and worked in corporate finance at PwC, he has experience of building high performing organisations that deliver to stretch targets, be it in fast growing medium sized enterprises or large corporates. Most recently, he was part of the Finance Leadership Team and has worked as Finance Director in three divisions at Network Rail and was involved in the successful delivery of hundreds of millions worth of engineering projects.

Enquiries

Peel Hunt LLP ("Peel Hunt") is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Peel Hunt is acting solely as nominated adviser, under the AIM Rules, for the Company and no one else in connection with the contents of this announcement and will not regard any other person (whether or not a recipient of this announcement) as its client in relation to the contents of this announcement nor will it be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the contents of this announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on Peel Hunt by the Financial Services and Markets Act 2000, or the regulatory regime established thereunder, Peel Hunt accepts no responsibility whatsoever, and makes no representation or warranty, express or implied, for the contents of this announcement including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on behalf of it, the Company or any other person, in connection with the Company and the contents of this announcement, whether as to the past or the future. Peel Hunt accordingly disclaims all and any liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above), which it might otherwise have in respect of the contents of this announcement or any such statement.

In connection with the proposals referred to in this announcement, Peel Hunt and its respective affiliates, may act as investors for their own accounts, may subscribe for or purchase ordinary shares in the Company and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such ordinary shares and other securities of the Company or related investments in connection with such proposals or otherwise. Accordingly, references to the ordinary shares being offered, subscribed, acquired or otherwise dealt in should be read as including any offer to, or subscription, acquisition, or dealing by Peel Hunt and any of its respective affiliates acting as investors for their own accounts. In addition, Peel Hunt or its respective affiliates may enter into financing arrangements and swaps in connection with which it or its affiliates may from time to time acquire, hold or dispose of ordinary shares. Peel Hunt has no intention to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.