Subject to authorisation by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA), Redwood aims to open its doors in 2017. Acorn is funded by the wealthy Rowland family and a range of other investors.
The bank will offer SME commercial mortgages and business deposit accounts, initially focusing on UK SMEs in Hertfordshire, Bedfordshire and Buckinghamshire. It will also cater to experienced commercial and residential property investors and intends to establish a national network of brokers and a digital distribution channel for deposits.
Redwood’s founders anticipate investment of £50m in the next five years. They believe uncertainty caused by Brexit and legacy problems from the credit crisis will continue to restrict appetite among the mainstream banks for commercial property lending.
AFP is led by Jonathan Rowland, who will be chairman of Redwood if approval is granted. He was involved in the restructuring and recapitalisation of Kaupthing Bank Luxembourg into Banque Havilland S.A. and Banque Havilland (Monaco) SAM during the financial crisis and was chief executive and a director from 2009-2013.
AFP’s majority shareholder is Acorn Global Investments (AGI), a business controlled by Jonathan and his father David Rowland. AGI was established in 2015 to invest in financial services and in particular the banking sector. Its investors include: Wildcat Capital Management, Rick Gerson (Founder of Falcon Edge) and David Williams (founder of Williams Trading).
The intended chief executive of the bank is Gary Wilkinson, the former chief executive of Cambridge & Counties Bank, which provides lending and deposit products for SMEs. Wilkinson led Cambridge & Counties’ successful authorisation and launch in 2012. He has over 30 years’ experience in the sector.
Jonathan Rowland said: “This is an ideal time to apply for a full banking licence; the major banks have not returned to anywhere near their pre-crisis business lending levels and the uncertainty caused by Brexit is likely to worsen the situation. At the same time, SMEs have shown a strong appetite for new market entrants offering competitive rates and superior customer service. Against this backdrop, we have a compelling opportunity to build a secure, robust and profitable bank.”
Wilkinson added that the need for finance among small and medium sized businesses “could not be greater”.
“I am certain that Redwood’s relationship-driven, agile and traditional approach, combined with straightforward and transparent products, will resonate among ambitious business owners seeking to grow over the coming years,” he said.