Harrods Bank, a brand which has been around since 1893, is set to be sold to challenger online-only Tandem after years of loss making.
The banking arm of one of the world’s most famous department stores, based in Knightsbridge, offers savings and has also had mortgages and a current account available in the past.
On its website, a message says: ‘Tandem has today announced that it has signed an agreement to acquire Harrods Bank.
‘The transaction is subject to regulatory approval and all parties involved will work closely with customers and other stakeholders over the coming months to ensure a smooth ownership transition.’
Harrods Bank: The brand will disappear after 120 years if its takeover by Tandem is given the green light
The move will turbo-boost Tandem’s plans to launch savings accounts.
The start-up lost its banking licence in March after an expected £29million investment from House of Fraser owner China Sanpower Group was dropped.
On the Harrods website, it is offering a one-year rate of 1.45 per cent and a two-year rate of 1.25 per cent, on balances over £20,000.
In 2014, as revealed by This is Money, it was attempting to crack into the mass savings market by offering a number of accounts.
Previously, it only offering bespoke deals to its well-heeled customers at its branch on the second floor of its store.
This branch will close while it will stop providing accounts and end some of its older savings products.
In a bid to attract high-net worth savers, it also offered ‘reward’ points to be used in store for those who put in more than £50,000.
It has been losing money for a number of years. In the year that ended 31 January 2016, it lost £6.3million while in the year previous it was £3.9million.
Millions of pounds went on an IT system which was meant to make the bank go digital in 2015, but was dogged with problems.
The Tandem acquisition will provide it with £80million of capital along with the banking licence needed to offer accounts in Britain.
Other financial terms have not been disclosed and it is not clear if the Qatari-owned sellers will have a stake in Tandem.
On the Harrods website, it adds: ‘The bank will remain authorised by the PRA and regulated by the PRA and FCA and will continue to operate its business and service its customers.
‘The Bank’s deposits are also protected by the Financial Services Compensation Scheme, the UK’s deposit protection scheme.’
Ricky Knox, founder of Tandem, said: ‘Tandem has been built from the ground-up with the help of over 11,000 co-founders, who have helped us shape products and services that really make a difference to their lives.
‘This acquisition will allow us to scale the business and ensure we can introduce as many people as possible to a new way of banking.’
Last year, in an exclusive interview with This is Money , Mr Knox said that the bank was to launch later in 2016 with an aim to become a ‘mass market’ player within the next decade.
At the time it had a banking licence, but this was stripped away in March after funding fell through.
When it eventually launches, it plans to offer current accounts, credit cards, loans and mortgages, as well as savings accounts.
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