July 2019
CITY OF LONDON GROUP PLC City of London Group is the parent company of a number of businesses focused on serving two key segments, the UK SME market and home reversion P&FS offers property and CAML provides debt Owns a portfolio of home bridging loans for acquisitions, and asset finance to reversion plans refinancing, refurbishments SMEs and development Residential property Established in 2011 investments of approx. Established in 2018 £71m and a vacant possession value of £96m Works through broker Loan terms are channels structured to fit individual Established in 2004. At 31 business plans, bespoke March 2019, the business had to the customer 570 plans, secured on 510 Loan book approx. £16m properties Has already sanctioned Focus on equipment Is a liquidating asset £7m in deals finance, professional and generating c £2m of cash per commercial loans annum 02
CITY OF LONDON GROUP PLC Established in 2018 to provide Established in 2008 as an financial services to the UK SME independent intermediary sector Targets an underserved but growing Whole of market broker for business customer population insurance, mortgages, pensions, commercial loans and investments Customer proposition will be centred on Serving Private Clients and SMEs business understanding, responsiveness, with strong emphasis in the expertise, accessibility, flexibility and Property Sector fairness. Enabled by a market leading IT platform. Arranged over £150M of commercial Banking licence application debt progressed 03
THE OPPORTUNITY “A new UK-based SME bank focused on service excellence, speed of execution, flexible structuring and durable customer relationships.” 04
MARKET DYNAMICS- SME BANK OPPORTUNITY 5.7 million SMEs in SME new lending Strong political and regulator the UK and growing market approx. support for more new £5.5bn per quarter entrants (CMA5 currently hold 90% of market share) PRA Business Plan 2018/19 We require circa 4,500 borrowers or 0.1% market share – in the next 3 years expect to achieve our 5 year target around 20-30 new banks (Source: Mintel survey for Recognise Financial Services Ltd 2018) 05
SME NEW* ENTRANTS HAVE DEMONSTRATED EARLY PROFITABLE GROWTH LENDING TO DEPOSITS TO PROFIT COST/ LOAN TO NET CET1 RETURN ON CUSTOMERS CUSTOMERS BEFORE INCOME DEPOSIT NAME RESULTS COMMENTS MARGIN RATIO EQUITY (£M) (£M) TAX (£M) RATIO RATIO Acquired by FirstRand 8,991 7,776 195 Jun 18’ 3.5% 46% 12.3% and delisted from LSE 13.9% 116% (+20%) (+16%) (+52%) in Mar/18 The Group is now 100% 5,845.9 4,977.9 110 owned by BC Partners and Dec 18’ 5.1% 51% 12.3% 16.1% 117% (+21%) (+3%) (+27%) Pollen Street Capital 769 901 28 Additional capital of £31m Dec 18’ 4.6% 34% 16.8% 22.3% 85% (+11%) (13%) (+14%) injected by existing S/H Launch of Specialist 632 596 10 Business finance with Dec 17’ 5.1% 58% 21% 9.3% 106% (+36%) (+14%) (+125%) senior hires 1,297 1,185 34 £100m of Reg Capital raised Dec 18’ 6.3% 37% 26% 19.0% 109% (+113%) (+139%) (+220%) in 2018 Acquisition of Azule Ltd lead 186.26 191.14 7 to increase in £16.5 million Sep 18’ 7.7% 32% 20.8% 19.9% 96% (+222%) (+260%) (-22%) loan book *opened post 2010 06
WHY WILL RECOGNISE BE SUCCESSFUL? 200+ YEARS’ EXPERIENCE Management experience Relevant Retail and lending business products savings Passionate about relationships, continuity PRIVATE BANK Speed of response, of management and pace of execution, FOR SMES access to decision flexible structures makers Customer focus, Breadth of delivery channels BLACK BOOK commitment to innovate and existing professional and exceed expectations /customer networks Experience drawn Strategy Versatile Robust risk from COLG existing ABILITY TO TEST BEST-IN CLASS founded Cloud-based culture and businesses and PRODUCTS TECHNOLOGY on long term IT platform framework shareholder viability commitment 07
RECOGNISE EXECUTIVES – A TEAM WITH DEEP EXPERIENCE JASON OAKLEY BRYCE GLOVER Chief Executive Officer Deputy Chief Executive Officer 33 years’ experience 36 years’ experience Formerly MD of Commercial Banking MD of Commercial Banking & at Alliance & Leicester/Santander; Mortgages at Metro Bank. Head Commercial Director at Nationwide of SME at NatWest & RBS. BS responsible for a £22bn lending portfolio. NED and Chair of Group Risk Committee at Newcastle Building Society. ADRIAN GOLUMBINA RICHARD LUMLEY Chief Financial Officer Chief Risk Officer 23 years’ experience 30 years’ experience Previously Finance Director of Head of Credit at Northern Trust, three large divisions of Network Senior risk consultant in market Rail, Group FD of Euroway Group risk at Deutsche and Deputy and FD of Hanco ATM Systems Chief Risk Officer at SMBC Nikko. Ltd. 08
RECOGNISE EXECUTIVES – A TEAM WITH DEEP EXPERIENCE JAMES BLOWER MARK BAMPTON Chief Marketing & Savings Officer Chief Credit Officer 24 years’ experience 31 years’ experience Former Savings Director of Former National Head of Shawbrook and Masthaven Banks Commercial Property Finance at and ex-Marketing Director of Nationwide BS. Retail banking specialist lender, Pepper Money. with NatWest & SME business Founder of Savings Guru which has deposit taking operation at worked with eight new entrants to the Nationwide BS. savings market. MARTIN PARSONS MONICA VALESQUEZ Managing Director of Asset Chief Technology Officer Finance 4 years’ experience 31 years’ experience Former Technology Consultant at PwC. Banking Authorisation, IT Former Director of Universal Leasing Ltd and Head of service and risk management. Has recently advised 6 banking European Business licence applicants. Qualifications Development for Barclays and CitiCapital. include both Electronic Engineering and Management. 9
PRODUCT PROPOSITION LOANS USE: Commercial Property/Working THIRD Capital/Professional Buy-to-Let/Refurbishment/Asset PARTY Finance/Bridging Finance/General Purposes SIZE: up to £2.5m LENDING TERM: 3 months to 5 years DEPOSITS CUSTOMER: Retail and SME DEPOSITS SIZE: min. £1k (FSCS protected) TERM: up to 5 years 10
ROUTES TO MARKET ROUTES TO MARKET BROKERS DIRECT GROWING CONTRIBUTION OF INTERNALLY DRIVEN BUSINESS DEVELOPMENT Time DELIVERY CHANNELS Regional Business Commercial Trade Other Lenders/ Direct Development Brokers Associations / Existing Clients Managers Affinity Groups 11
RECOGNISE TECHNOLOGY The Recognise technology environment will be the next digital banking platform for SMEs SELECTION OF KEY PARTNERS using the best-in class technology to enable open APIs banking, and ensuring PSD2 and GDPR regulatory compliance. The platform will CORE BANKING PLATFORM be hosted in the Amazon Web Service cloud, A core engine to manage the loan process. Flexible and orchestrated via Mambu’s managed and supporting all our business scenarios. The service. We will automate some of our platform has been deployed worldwide, OakNorth processes, thus allowing us to focus on being the most noticeable client in the UK. serving our customers and delivering a fast and efficient service, in days not weeks. DEPOSITS Manages the deposit taking, maintaining and closing of savings. Delivers its service to 13 banks, including Aldermore and Paragon. IMPLEMENTATION 16 weeks OTHER PARTNERS To deliver a complete solution we are well-advanced in conversations with TESTING suppliers for regulatory reporting, 8 weeks accounting, payments, KYC/KYB, and Omnichannel experience. 12
WHERE ARE WE NOW? § Testing § Mobilisation ü Journey begins ü 1st Regulator ü Recruitment of § PRA Challenge § IT/Build/ § £50k deposit taking and terms agreed Challenge CTO Chair/NEDs Feedback Implement § Rollout product suite ü Introductory Recruitment § ICAAP/ILAAP § Meet regulatory meeting with ü 2nd RBP Challenge § Intended institutional requirements regulator Submission fundraise § PRA Capital/Liquidity ü CRO/FD/CCO requirements recruitment (additional £10m) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020 § Invitation to apply ü 1st ü 2nd ü Completion § Deposit § Full Regulator Regulator of £15.2m platform build / licence Challenge Challenge fundraise implementation § Recruit key roles (20 FTE) Next Steps Our journey so far… 13
SUMMARY Why us? A depth of Track record of challenger and high building new street bank SME businesses experience Established The lessons networks and learned from contacts in key economic cycles regions over 3 decades Built a strong independent Board to support an ambitious executive team “Having seen the proposed service proposition, 90% of market research respondents would expect Recognise to offer better service than their current bank” Brandface - April 2018 14
IF WE ARE SUCCESSFUL £1.1bn Loans IN DELIVERING OUR £1.3bn Deposits STRATEGY, WITH IMPACT, BY 2024….. New products Cost/Income launched from 44,000 Ratio lean, versatile Depositors Over 100 36.5% cloud-based energised platform colleagues 4,500 Borrowers Profits Before Tax > £30m Recognise brand renowned for Business Centres in London, business understanding, Midlands, Manchester and Leeds responsiveness, expertise, accessibility, flexibility and 15 fairness
Recommend
More recommend
