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Brexit boost for British challenger bank

Tuesday, October 25, 2016 - 01:39

While Britain's biggest banks worry about the uncertainty of Brexit, one start-up bank is reaping the benefits of the U.K.'s shock referendum result to leave the EU. As Sonia Legg reports, OakNorth's loan book has doubled since the June vote and it predicts more opportunities ahead.

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British banks have been the loudest opponents of Brexit. But for one - Britain's vote to leave the EU was a bonus, even though its boss didn't vote for it. (SOUNDBITE) (English) RISHI KHOSLA, CHIEF EXECUTIVE OF OAKNORTH BANK SAYING: "The major banks have become much more cautious on their lending and much more aware of their current positions in their loan books and that's meant they've slowed down new lending to a certain level which is actually helping us pick up additional volume which otherwise wouldn't necessarily come to us." OakNorth was launched last September. It and other so-called challenger banks are hoping to break the grip the likes of HSBC, Lloyds and Barclays have over British banking Since the Brexit vote it's doubled its loan book to £200 million, with £60 million more in the pipeline. Fast-food chain Leon is one of its new clients - it used to bank with HSBC. (SOUNDBITE) (English) KIRSTY SADLER, BRAND AND MARKETING DIRECTOR, LEON, SAYING: "It was actually much more compelling to work as an entrepreneur-driven business with another entrepreneur-driven bank." The big banks are about to report their latest earnings - the first full quarter since the Brexit vote. Whatever they show the sector is clearly changing. Other challengers like Shawbrook, Aldermore and Metro Bank have all seen recent growth. (SOUNDBITE) (English) CO FOUNDER, SEVEN INVESTMENT MANAGEMENT, JUSTIN URQUHART STEWART, SAYING: "Unfortunately they are not big enough yet, we need them to be on a bigger scale. Remember banking is changing shape radically. In a few years time we will look back at the banks of this decade and they will almost look antiques." But some fear the start-up banks are achieving growth by taking on risky borrowers turned down by the big establishments. OakNorth rejects that, saying it relies on private equity and deposits to support its growth.

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Brexit boost for British challenger bank

Tuesday, October 25, 2016 - 01:39