End of an era
London’s iconic luxury department store Harrods will be closing the operations of its only banking arm on the second floor after suffering losses for years. The 124-year-old bank has said that it will stop providing accounts and end some of its older savings products, after a strategic review of its operations.
The Bank reportedly lost £6.3m in its most recent fiscal year to the end of January 2016, up from a loss of £3.9m a year earlier. The lender had reported a more than trebling in other income to £1.7m, but staff costs grew over the same period from £6.3m to £10.8m as employee numbers rose from 46 to 81.
It was announced last month that Harrods Bank would be acquired by financial services company, Tandem, after a failed Chinese investment stripped the UK start-up app of its banking licence earlier this year. An article in FT had reported how the acquisition would provide Tandem with £80m of capital as well as a banking licence.
Tandem is backed by the Omidyar Network, the investment vehicle of Pierre Omidyar, founder of eBay, said it would use the takeover of Harrods Bank to “accelerate” its launch plan to offer savings accounts to customers.
In a statement last month, Ricky Knox, founder of Tandem, had said, that the acquisition will “allow us to scale the business and ensure we can introduce as many people as possible to a new way of banking.”
With a heritage dating back to 1893, Harrods Bank offered savings, mortgages, gold bullion, and money transfers. While the operation size of the bank was small compared with other big high-street banks, the lender enjoyed reputed customers.
A message on Harrods Bank’s website states that subject to regulatory approval, Tandem Money will acquire Harrods Bank.
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