Finextra reports the deal comes after Tandem lost out on a £29 million cash injection from Sanpower, the Chinese conglomerate and owner of House of Fraser. The news was seen as a major setback to Tandem's plans to launch as a full bank in the U.K., as the company also missed licensing deadlines imposed by the Prudential Regulatory Authority.
Tandem's acquisition of Harrods Bank, which posted pre-tax losses of £8.4m 2016 on net income of £2.3 million, gives the startup a £200 million loan book and £300 million in deposits. Business Insider reported that as part of the deal, Harrods' Qatari owners are injecting £80 million of new money into the bank.
While Tandem's funding setback and licensing issue delayed the launch of its savings account offering, the company said the deal should help make the U.K. launch happen by the end of the year.
"We can accelerate our launch plans and start offering savings accounts soon,” said Tandem in a news statement. “We will continue developing and rolling out our app and credit card as planned, [now] with a little more spring in our step. When the deal is finalized, we’ll operate the whole business under the Tandem brand."
The agreement is still subject to regulatory approval, but Tandem expects the deal to be finalized in "a few months."
Founded in 2014, Tandem's app allows customers to view all of their bank accounts in one place to better monitor spending. The company is also internally testing its credit cards with plans to launch the offering to the public later this year.
"Tandem has been built from the ground up with the help of [more than] 11,000 co-founders, who have helped us shape products and services that really make a difference to their lives,” said Ricky Knox, Tandem's founder and CEO. “This acquisition will allow us to scale the business and ensure we can introduce as many people as possible to a new way of banking."