The Bank of London Under Regulatory Investigation by UK

as Financial and Leadership Turmoil Mounts

The Bank of London (BoL), a relatively new player in the UK’s clearing bank sector on Wednesday, May 14, 2025, disclosed that it is currently under investigation by UK financial regulators.

The news was made public in the bank’s recently filed accounts and has raised serious concerns about its long-term viability.

This development marks another setback for the struggling fintech firm, which has experienced a cascade of problems in recent months.

Among the most notable blows is the resignation of its founder, Anthony Watson.

Other resignations were those of several key board members, including Mandelson and prominent U.S. private equity executive Harvey Schwartz.

Additionally, the company has downsized its workforce by 50% since becoming embroiled in a public dispute in September.

This was when the UK tax authority issued a winding-up petition over unpaid debts.

BoL’s newly filed annual accounts, reveal that the Bank of England’s Prudential Regulation Authority (PRA) has launched a formal investigation into possible regulatory breaches.

The accounts were reportedly submitted seven months past their deadline.

These alleged violations date back to before a change in the bank’s ownership, which occurred in May 2024.

This was supposedly when a Jersey-based company, now operating as Fellesskap Group & Holdings, became BoL’s new parent entity.

According to statements in the accounts, the firm has been officially notified by the PRA about the probe into “certain historical matters” that happened before the ownership transition.

While BoL has acknowledged the investigation, it has also stated that it is too early to determine the financial implications or how much it may need to allocate for potential penalties or legal costs.

In the meantime, the bank says it is cooperating fully with the PRA.

It also says it has initiated its own internal inquiry to examine the issues under scrutiny.

The announcement coincides with the bank’s disclosure of a £12 million loss for the year 2023.

The accompanying financial statements received only limited endorsement from its auditors at EY.

They cited “inadequate historical records,” particularly in relation to a staff share option scheme.

These accounting discrepancies have further deepened doubts about the firm’s operational stability.

EY expressed additional concerns about the potential consequences of the ongoing regulatory investigation.

It also questioned BoL’s ability to secure sufficient funding to support future operations.

In their audit report, the firm wrote:

“There are material uncertainties relating to events or conditions that … may cast significant doubt on the company’s ability to continue as a going concern.”

This language reflects the auditors’ skepticism regarding the bank’s prospects of remaining solvent amid mounting challenges.

The Bank of London operates not as a traditional lender but as a clearing bank.

It is supposedly a specialized role that involves handling the infrastructure required for processing payments and transactions on behalf of business clients.

Clearing banks form a critical part of the financial system by facilitating the settlement of payments between institutions.

Founded in 2021, BoL made headlines by becoming only the second new clearing bank to be established in the UK in the past 250 years.

The firm entered the market with ambitions of disrupting the dominance of the “big four” UK clearing banks—NatWest, Lloyds, Barclays, and HSBC.

These banks have long controlled this essential segment of the financial system.

At its peak, BoL was valued at $1.1 billion (approximately £826 million) in 2023.

It also attracted attention for its political connections, particularly with the UK Labour Party.

Founder, Anthony Watson, a former executive at Barclays, served on Labour’s business and enterprise advisory council prior to the general election last summer.

Meanwhile, Peter Mandelson, now serving as the UK’s ambassador to the United States, held the role of deputy chair on BoL’s board before stepping down in 2023.

The regulatory probe and ongoing financial turmoil now pose existential risks for a bank once heralded as a groundbreaking challenger in the UK’s financial sector.

Experts posit that with doubts swirling around its governance, funding, and regulatory standing, BoL faces an uphill battle to restore credibility and stabilize its future.

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