London gets its second new clearing bank in 250 years today, as The Bank of London launches in the city to approve and process cross-border payments.
Founded by Anthony Watson, a former chief information officer at both Nike and Barclays, The Bank of London is taking on the four banking giants HSBC, Lloyds Banking Group, NatWest and Barclays, which have dominated the market since the 1960s.
It becomes the sixth principal clearing bank in the City, preceded by ClearBank, which was launched in 2017.
The Bank of London plans to hire 3,000 people over the next five years across the UK, Europe and North America, it said in a statement.
“We’ve spent over four years working quietly in the background, bringing together veteran banking experts, leading creative innovators and visionary technologists to build, patent and validate game-changing technologies and innovations to transform the very fundamentals of banking,” said founder and CEO Anthony Watson.
Billing itself as the first pre-revenue bank in history to attain a valuation north of $1bn – i.e., “unicorn” status – as it enters the market, the new clearing bank is seeking to disrupt what it argues is an “arcane” part of the market, inadequately served by the existing Big Four banks.
It aims to offer “cheaper, faster and safer” versions of these clearing services, which will include payments clearing, compliance, enabling cross-border transactions and cash management.
Harvey Schwartz, a former president and chief operating officer at Goldman Sachs who had been in the running for the top job before he left the firm in 2018, will chair the new bank.
He said The Bank of London is aiming to change “the sleepy worlds of clearing and global transaction banking.”
“During the great financial crisis, I saw first-hand how the legacy payments, clearing and settlement processes that are at the heart of the global financial system contributed to bringing the world’s economies to their knees, through their inefficiencies and inherent liquidity risk,” Schwartz said.
The Bank of London has raised $120m to date, and its latest $90m funding round was led by New York-based investor ForgeLight, with follow-on investment from existing backers 14W Venture Partners and Mangrove Capital Partners.
It comes a couple of weeks after Brussels yielded to demands from City firms to allow them to continue their crucial clearing services to clients in the bloc and pushed back the deadline beyond June 2022, without giving further detail.