Digital only bank Tandem Bank has £29m of investment fall through amidst fears of Chinese blockage.
Tandem Bank, the banking app that can sit above a user’s existing banking services, has had the second tranche of a planned investment pulled. Fraser Financial Services has pulled out of the remainder of the £35m deal, after investing £6m in December. Fraser Financial Services is an investment arm of House of Fraser, which is owned by the Chinese conglomerate Sanpower Group.
The cancellation has been attributed to uncertainty over whether China’s State Administration of Foreign Exchange would approve the deal. Fraser will remain an investor in Tandem, and says that making Tandem’s services available to its millions of customers will remain a priority.
As a direct result of the cancellation, Tandem has been forced to surrender the part of its regulatory permissions that would have allowed it to take deposits, officially putting a halt to its plans to offer savings products to customers. The remainder of the £35m would have buttressed the bank with the required amount of regulatory capital for accepting deposits.
The full launch of the app – which should take place within the next few months, and which will focus on financial oversight and optimisation – will go ahead as planned. Tandem will also look to launch credit cards later this year. But savings products have been put on the backburner for the foreseeable future.
“The only change for customers is that we will no longer be launching savings accounts in the short term,” said founder Ricky Knox. “Our app will still help our customers manage their money better and actually find them cash, and our fair credit card will launch in a few months. We will be in a position to quickly re-apply for our permissions to offer savings accounts at the right time for our customers.”
Tandem is now in the process of being restructured to reflect its new regulatory status. A representative for the firm declined to comment on whether any plans for further fundraising have been laid.