Clearbank has doubled its deposit base in six months as it benefited from rising interest rates and attracted new clients in the wake of Silicon Valley Bank’s (SVB) collapse.
The fintech clearing bank said it saw a 20 per cent spike in deposit in-flows immediately after SVB’s collapse, taking its total deposits to £3.7bn. Since then, Clearbank has continued to accumulate deposits with it now holding £5.4bn.
“The main driver has been institutions seeking better returns than those offered so far from the mainstream banks, which have been slow to pass on rate rises and to offer competitive deposit offerings,” Emma Hagan, chief risk and compliance officer at Clearbank said.
As interest rates have risen, consumers have been more proactive in parking their money at banks offering competitive rates. Many challengers have benefited from this trend over the past year.
Clearbank, which launched in 2017 as the first new clearing bank in 250 years, offers fully regulated banking infrastructure and clearing services.
It does not lend its customers’ funds, meaning deposits are immune from the risks of a bank run.
Hagan, who was formerly chief risk officer at SVB Europe, drew attention to the specific features of a clearing bank that make it attractive to clients post-SVB.
“The fractional banking model used by most banks, means they need to use their deposits to fuel lending or to put them to work to drive profits and returns for shareholders,” she said. “This means the risk is still there if large numbers of customers choose to withdraw funds at the same time”.
Fellow clearer, Bank of London, recently announced it had secured £300m in deposits in the first six months since it secured a banking licence.