LONDON – Startup bank Tandem has agreed to buy Harrods Bank, four months after seeing a £29 million funding deal collapse.
Tandem, which is aiming to build a mobile-only bank, announced on Monday that it has signed a deal to buy the banking business of high-end department store Harrods. The exact financials of the deal have not been disclosed.
Harrods Bank’s Qatari owners are injecting £80 million of new money into the bank as part of the deal, a boost for Tandem after a funding setback earlier this year.
Tandem announced last December that it had secured a £35 million investment from department store House of Fraser. However, House of Fraser is owned by China’s Sanpower and a crackdown from Beijing on capital flight led to the investment falling through after Tandem had received just £6 million of the £35 million.
The funding setback led Tandem to lose its banking license as it no longer met capital requirements. The startup, founded in 2014, also reduced total staffing numbers from around 120 to 80.
Tandem says in a blog post announcing the Harrods Bank deal that the transaction means its “future is secured.”
Harrods Bank brings a near-£200 million loan book and over £300 million of deposits, City AM reports. The bank lost £8.4 million last year.
Tandem’s funding setback and licensing issue delayed the launch of its savings account, but Tandem said on Monday that the deal should help accelerate the launch, allowing it to happen by the end of the year.
Ricky Knox, Tandem’s founder and CEO, said in a statement: “Tandem has been built from the ground-up with the help of over 11,000 co-founders, who have helped us shape products and services that really make a difference to their lives. This acquisition will allow us to scale the business and ensure we can introduce as many people as possible to a new way of banking.”
The Harrods Bank brand will be phased out in favour of Tandem.
Last month Tandem launched its app to its community of “co-founders.” The app allows people to view all their bank accounts in one place and monitor spending. Tandem is also testing its credit cards internally, with plans to launch to the public later this year.
Tandem, founded in 2014, is one of a number of app-only banks set up in Britain in recent years. Others include Monzo, Atom, and Starling. Tandem has raised over £25 million to date from investors including eBay founder Pierre Omidyar.