Harrods Bank sold to digital challenger Tandem | City A.M.

The banking arm of luxury department store Harrods has been sold to digital challenger bank Tandem in what’s understood to be a multi-million pound deal, City A.M. can exclusively reveal.

The Harrods Bank brand will disappear as Tandem takes over the loss-making bank’s business, including loans, savings and current accounts.

The deal is a left field move for the four-year-old fintech startup, but gives it instant access to a range of financial products, a banking license and revenue.

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Tandem was unable to meet the Bank of England’s requirements for a full banking license after House of Fraser owner Sanpower pulled millions in funding from the startup earlier this year.

Founder Ricky Knox said the deal will take pressure of Tandem to make money in the immediate future, but that it should help it reach profitability more quickly.

The acquisition will make it the most mature digital challenger bank in the nascent market, propelling it ahead of rivals with a near-£200m loan book and over £300m of deposits.

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Reports that Harrods owner Qatar Holdings was considering a sale of the more than century-old bank surfaced earlier this year. Pre-tax losses at Harrods Bank grew to £8.4m 2016, the latest accounts available, from £4.9m the year before. Net income was £2.3m, up from £1.1m a year earlier.

The deal is subject to regulatory approval after which Tandem will start a full review of the Harrods Bank product range and staff.