Banking

Lights Out For Loot?

FinTech

When businesses get sold, the deals can happen for a variety of reasons. The buyers can be strategic, looking for technology or staff to help them get to the next level.  The reasons may be financial — and every so often, owners look to sell to pocket rewards for their hard work.

Sometimes companies get sold — or put themselves up for sale — because they need a lifeline. In the case of one neo-bank, based in the U.K., the lifeline did not come through.

According to reports, such as one in TechCrunch, Loot, which had been coming to market with a digital account geared toward the younger population, namely students and millennials, has entered administration. The company, according to reports, had run out of cash as a sale to Royal Bank of Scotland (RBS) apparently failed to materialize. RBS in turn had owned a 25 percent stake in the FinTech, albeit indirectly, with an investment in Bó (which had a cumulative 5 million pound stake in Loot), the digital-only retail bank under development from NatWest, itself an RBS subsidiary.

Other investors in Loot included Portag3 Ventures (Power Corporation’s corporate VC arm) and Rocket Internet’s GFC, among several holders.

The FinTech had roughly 250,000 registered accounts at the time of this writing as it goes into administration, with a mobile app and Mastercard offering. The neo-bank moniker came as Loot had been granted an electronic money license through partnership with Wirecard, which is in turn regulated by the Financial Conduct Authority.

The fact that Loot has gone under may speak to company specific issues, but the firm is not the first challenger bank to be, well, challenged. Last month came reports that Revolut is tweaking its business practices.

Revolut, which offers digital banking, has had its own issues with the Financial Conduct Authority in the U.K. and the Advertising Standards Authority and the parliament in Lithuania. The company’s CFO left the firm earlier this year, and the company reportedly had alleged compliance lapses tied to its sanctions screening system.

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