Lending to start

McColl’s Alba Bank ‘to launch in second half of year’

Jim McColl

Jim McColl: ‘We have a planned pod network’

Entrepreneur Jim McColl says his Alba Bank for SMEs will start lending in the second half of this year.

Alba has raised funds to support a pre-money valuation of £5.7m and Daily Business revealed last month that it had launched a £5m Series A funding round, open to private investors.

This funding will allow the bank to transition to second-stage operational status under a restricted licence and the funds will be roughly split between securing a “mobilisation'” licence and supporting the continuing investment in the IT platform and building the team.

McColl said that following talks with the Prudential Regulation Authority – which oversees the granting of banking licences – he now knows the amount of capital required to move into mobilisation, “after which you can call yourself a bank and start lending”.

Mobilisation usually lasts for between four and six months during which the PRA monitors performance and tests the IT systems. Subject to raising further regulatory capital the business can progress to being fully licensed.

“We have a planned ‘pod’ network in cities across the UK including Aberdeen, Belfast, Bristol, Glasgow, Leeds, Liverpool and Middlesbrough, and all being well, we can start lending to businesses in the second half of 2021,” he told The Manufacturer website. This would mean slippage from its earlier plan to launch in the first half of this year.

Ewan Lloyd-Baker, head of the investment fund management company Seismic Venture Partners, which is leading the Series A fund, told the website that Alba is aiming to lend £100m to support businesses within the first 12 months. CEO Rod Ashley’s plan is that by year four, nearly half a billion pounds worth of capital will have been deployed. By year 10, the figure rises to nearly £5bn,” he said.

“These are very achievable numbers and when you think about the positive difference this money could make to businesses, their employees and the wider local economies they operate within, that’s why I get really excited about the opportunity.”

Dr Lloyd-Baker expressed frustration at a “lack of cross-party agreement on the future of manufacturing and industry in general” exemplified by the recent disbanding of the Industrial Strategy Council.

“Maybe we should have a rebrand – akin to FinTech for the financial services sector, industrial technology or ‘IndTech’ – in order to get the attention of politicians so they can appreciate how valuable and crucial our sector is to the overall economy, and especially on the back of the ventilator and PPE challenges and Brexit.”

Mr McColl said he had lobbied both the UK and the Scottish Government on the need for a “proper industrial policy” that supports UK companies.

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“It’s all very well having great statistics on inward investment, but you really want to support homegrown businesses,” he said.

“One of the challenges that we have is the loss of bank guarantees for sizeable domestic or export orders. Those disappeared overnight following the 2008 banking crisis and no real effective replacement has been put in place.

“The Chancellor is setting up a UK infrastructure bank to fund capital projects, but we need a broader support for industry in this country.

“In light of the crisis we’ve faced and the borrowing going on, I don’t understand why the British Business Bank hasn’t been turned into a National Investment Bank. They’ve already got the infrastructure, what they need to do is go and raise third-party money on the bond market.”

“Being government backed, you could have long-term, 20-year bonds, and the resulting money could be used to provide guarantees and support businesses.

“Putting guarantees in place would help prevent overseas businesses outbidding UK firms and if you’re funding this through bonds and its arm’s length, it’s not seen as state aid.

“More importantly, it’s not part of your national debt. This could have been an easy win for Rishi Sunak; a simple act of Parliament could still make this happen.”

Interview in The Manufacturer

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