Start-up bank makes US push after £750m virus loans
A START-UP bank backed by former chancellor Philip Hammond is preparing to launch a US growth drive after dishing out more than £750m of loans since coronavirus struck.
OakNorth has hired Peter Grant, former UK boss of business software firm Salesforce, to oversee expansion of its US division as chief operating officer. The lender typically provides loans of between £500,000 and £25m to small and medium businesses. Established four years ago, it has lent over £4bn to UK companies. It is part-owned by Japanese investment behemoth Softbank, and has recruited heavyweights to its advisory board, including Mr Hammond and former Financial Services Authority chairman Adair Turner.
OakNorth has been boosted by taxpayer-backed emergency coronavirus loan schemes for small businesses. The lender said that in the past three months, twice as many of its loans went to the credit committee – typically the final stage of the approval process – than in the same period in 2019. OakNorth boss Rishi Khosla said the bank has grown its loan book throughout the pandemic. On average, it is now approving £150m of lending each month. He expects it to continue to be profitable after a £65.9m profit in 2019.
OakNorth also licenses so-called credit science technology to banks. This uses automation to check a customer’s credit worthiness, and speed up the loans process. This has been particularly popular in the US. Mr Khosla said the platform has helped banks go digital more quickly. More than $500bn (£375bn) of commercial loans have been processed through the credit science systems so far this year.
In June, Mr Khosla warned that fintech firms seeking to raise funds were struggling to attract support as investors veered into safer bets. Monzo is among the fintechs hit by the pandemic after reducing its headcount by 120 people, and posting a post-tax loss of £113.8m in its 2020 accounts, up from a £47.1m loss in 2019.
Philip Hammond, the former chancellor, is among a number of high-profile figures on OakNorth’s advisory board