18th Feb 2014 08:34
LONDON (Alliance News) - The Paragon Group of Companies PLC Tuesday launched a new challenger bank, making good on previous guidance that the new bank would get regulatory approval inside the second-quarter.
In a statement, the consumer finance lender and buy-to-let mortgage provider said it will provide Paragon Bank with an initial GBP12.7 million in capital and will inject more over time in order to support growth.
The bank, which is regulated by the 'twin peaks' of the Financial Conduct Authority and the Prudential Regulation Authority, is led by Richard Doe, the former Chief Executive of ING Direct UK.
The application process to receive a deposit-taking licence takes considerable time and effort, with UK regulators receiving increasing volumes of applications as would-be challengers to the traditional high street banks aim to take some market share.
At first, the bank will offer savings and loan products, with the aim of broadening competition and choice in the UK banking market.
While car finance lending through brokers and car dealers will be available from the off, savings products will be available online in the Spring.
The company said personal loans will be offered through intermediaries and will launch later in the year, with other consumer finance and SME products to be developed in due course.
"Today's launch of Paragon Bank marks an exciting development for the group and represents the third leg of the strategy, joining Paragon Mortgages, the buy-to-let lending business and Idem Capital, the debt purchase business. The establishment of Paragon Bank facilitates a return to consumer finance lending, benefitting from the group's heritage, expertise and scale as a low-cost specialist lender," Nigel Terrington, chief executive, said in a statement.
Shares in the firm were trading up 2% at 374.6888 pence per share Tuesday, making it one of the biggest gainers on the FTSE 250.
By Samuel Agini; [email protected]; @samuelagini
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