Start-up bank makes US push af­ter £750m virus loans

The Daily Telegraph - Business - - Business - By Michael Cog­ley

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

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