Bank of London sued for £1.5m over unpaid debts

A start-up clearing bank whose finances have come under scrutiny over an unpaid HMRC tax bill and that counts the Labour peer Lord Mandelson as a director is also being pursued in the High Court for £1.5 million over alleged debts.
The Bank of London Group Holdings faces a claim from Smart Trade Technologies UK that it breached an agreement struck in 2021 to pay the trading platform provider for use of its foreign exchange service, according to court documents seen by The Times. Smart Trade alleges that the Bank of London owes it €818,370 in unpaid debts and is seeking damages, taking its total claim to about £1.5 million.
It is the latest problem for the loss-making Bank of London, which has faced questions about its financial health after it emerged this month that it was subject to a winding-up petition issued by HMRC over unpaid tax. A source said the matter had been the result of an administrative error and that the tax had been paid.
The bank also announced that it had raised £42 million from investors shortly after the winding-up petition emerged. Anthony Watson, 47, its founder, stood down as its chief executive only days before the fundraise.
The business was officially launched in November 2021, when it became only the second new clearing bank in the UK in more than 250 years. It drew attention both for saying that it had been valued at $1.1 billion, meaning that it could lay claim to much-coveted “unicorn” status, and for the high-profile figures on its board. They include Harvey Schwartz, its chairman, a former top executive at Goldman Sachs who now runs the $435 billion American private equity firm Carlyle. Lord Mandelson also sits on the Bank of London’s board as deputy chair.
The bank’s valuation has also attracted attention because of the nascent state of its operations. The last set of accounts filed by its main operating business reveal that it fell to a £12.7 million net loss in 2022.
The 12-page particulars of claim, filed in the High Court in May, allege that Smart Trade entered into a five-year licence agreement with the Bank of London three years earlier. The Bank of London paid the initial set-up and first-year licence fee in August 2021 but it allegedly failed to pay the second-year licence fee by the due date in June 2022. The two sides instead agreed in November that year to pay the sum in instalments.
The Bank of London allegedly paid the first instalment but not the interest and “in further breach” failed to pay the second instalment in June last year. An invoice for the third year of the licence was also due in June, but the Bank of London allegedly failed to pay by the due date.
“As a result of the defendant’s failure to discharge the debts due and payable in respect of the year two and year three invoices, the defendant has made it clear that it does not intend to perform the contract,” Smart Trade claimed. “As a result of the defendant’s repudiatory breach of contract, the claimant has suffered loss and damage.”
Smart Trade is claiming €818,370 in accrued debt, interest of €114,461 and €780,000 for damages.
It sent a letter before claim to the Bank of London in September, but this was rejected that month.
A spokesman for the Bank of London said: “This claim relates to a minor commercial dispute in respect of which we have a robust defence which we fully expect to succeed.”