UK challenger bank Tandem has lost out on a £29m investment after one of its backers decided to pull its proposed funding.
The decision was made by House of Fraser – bought by Chinese firm Sanpower in a £480m deal in 2014 – due to limitations being placed on Chinese companies investing money abroad amid stalling domestic growth.
Despite this, House of Fraser will remain a minority shareholder in the FinTech company as a result of its £6m investment last year.
A company-issued statement highlighted the firm would pause its plans to offer savings accounts to customers in the short-term, but said the withdrawal of investment would not delay its plans to launch.
It continued: “This will not delay our launch to the market, with the app – which will allow customers to view all their money in one place and optimise their finances – still launching to the public in the coming months followed by credit cards later this year, subject to regulatory approval.
“We will add saving accounts and current accounts back into the range of services we provide as soon as we feel the time is right for our customers and our business. Our determination to reduce the stress people feel in managing their money is as strong today as it has ever been,” the statement said.
However, according to City AM, the startup will now miss a deadline for fulfilling some of the requirements of its banking license, which is authorised by the Prudential Regulation Authority. Tandem is expected to reapply in due course.
Its activities, the publication stated, will still be regulated by the Financial Conduct Authority when Tandem launches.
Today’s announcement follows reports that the firm made approximately 10 redundancies in an alleged attempt to lower its cash burn rate. According to sources cited by Business Insider, House of Fraser, which declined to comment, wanted the challenger bank to reduce its overheard costs.