House of Fraser pulls out of £29m Tandem investment

UK challenger bank Tandem won’t receive £29m of an investment it previously announced from UK retailer House of Fraser.

The retail firm’s Chinese parent company Sanpower was scheduled to pump £35m into the startup, having already invested £6m in December.

Tandem says the second wave of investment was cancelled as a result of uncertainty surrounding increasing limitations placed on Chinese firms investing money abroad.

The investment was intended, in part, to help the company meet the regulatory capital requirements needed to achieve a full banking licence.

The company says it intends to reapply for a license and return to its existing investors Omiday Network and Route 66 Ventures to search for new capital.

The immediate effect of the disinvestment is the pausing of Tandem’s plans to offer savings accounts to customers.

It maintains that the £29m shortfall will not delay the launch of its consumer app to the market in the coming months.

The company says its app will allow users to view and manage their money in one location with plans to add credit cards later this year if regulators approve.

Tandem says savings and current accounts will be added to the service when it feels the time is right.

The news comes as competition in the UK challenger banks space continues to heat up with Starling Bank launching in beta mode and Monzo racking up more than £12m in crowdfunding commitments.

Elsewhere in the space, Durham-based Atom Bank announced another £83m in funding from Spanish banking giant BBVA with more reportedly on the way.

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