Exclusive: ClearBank CEO plots European launch and M&A as profitability is reached

Cloud-based clearing bank ClearBank broke into profit in October on a monthly basis as its 2022 revenues to date reached £45.4m.

The milestone comes from ClearBank’s interim and as yet unaudited 2022 annual results, and the bank says its profitability is driven by growing transaction volumes, a customer base of now over 200 institutions from Chip to Raisin, and interest income from the £3bn worth of deposits it holds.

CEO Charles McManus wrote to ClearBank employees today to mark the fintech’s profitability and set out his direction for the coming years including details of European expansion and M&A, in a letter entitled ‘Collaboration is the new competition’ and seen by AltFi.

“ClearBank’s profitability means that we’ll be able to double down on what we know is working in order to make our work more impactful, and our support of clients stronger – at a time when they need it most,” the CEO explains.

Among the announcements made in this letter are that ClearBank plans to expand into Europe in 2023, starting with ClearBank Europe to launch in The Netherlands and with the US to come soon after.

“ClearBank’s largest embedded banking clients are moving into Europe where there’s a capability and service gap across technology, commercial know-how, and critically a full banking license, similar to the gap ClearBank has closed in the UK,” McManus wrote.

It’s not the first time McManus has made mention of international expansion, with ClearBank’s£175m funding round in March, led by Apax Digital, being described as preparing ClearBank for the challenge of “delivering this innovation globally”.

Looking ahead the CEO writes that expansion to Europe will require new products to be developed, including enhanced multi-currency accounts, API access to interbank payment schemes like SEPA and additional FX services.

McManus also today makes more than just a passing reference to ClearBank becoming more acquisitive next year, writing under the heading ‘future M&A activity’.

“The funds from APAX’s strategic investment will open M&A opportunities for ClearBank,” he writes.

“As the embedded finance space explodes there is a race to cover Sterling, Euro, and US dollar currencies on a fully licensed cloud-based platform. To lead this race there may be opportunities through M&A to consolidate various activities and businesses to accelerate European expansion.”

Profitability, international expansion and the potential for acquisitions on the horizon, all of which, McManus writes, will “bring us that much closer to Unicorn status.”