House of Fraser is hit by funding fears

THE future of House of Fraser has been thrown into doubt after the department store’s owner pulled funding for a small British bank.

Chinese billionaire Yuan Yafei’s business Sanpower bought the 167-year-old retailer for £480m in 2014, and he has repeatedly pledged to invest £75m to revitalise its fortunes.

But the money has not been forthcoming and the chain has lost a string of senior bosses in the past few years.

Now, City watchers fear the cash may never arrive after Yafei junked a commitment to back start-up lender Tandem.

The so-called challenger bank, which has been seeking to take on established High Street giants, was expecting a £29m investment from House of Fraser. But this funding was unexpectedly pulled in March because China was seeking to stem a flood of money out of its borders which it was feared might put the economy at risk.

The retailer cancelled the investment because of uncertainty about whether the deal would be approved by Chinese authorities, and Tandem lost its banking licence.

There are concerns that attempts to pump cash into the department chain could now face the same problem.

A House of Fraser spokesman denied £75m of funding had ever been promised by Sanpower – despite the fact the pledge has been widely reported since 2014.

Chairman Frank Slevin claimed in December it was a misunderstanding.