Recognise begins bridging and commercial lending in accelerated launch

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  • 01/12/2020
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Recognise begins bridging and commercial lending in accelerated launch
Recognise Financial Services has begun its bridging and commercial lending after it was awarded a restricted banking licence last month.

 

It expects to launch loans for professional landlords and asset finance offerings next year.

The lender, which is part of City of London Group (COLG), started offering four lending products last month – bridging and working capital loans, loans to the professional practice community and commercial property loans.

In its half year results COLG revealed it expects Recognise to bring its full lending capability on stream in April 2021 but had accelerated its move into these four areas.

COLG, which also owns lenders Property & Funding Solutions and Milton Homes, is also applying to change the Recognise name to Recognise Bank to accompany the licence award.

The Property & Funding Solutions book, which had seen new deals put on hold since March, has been used as a seed for the Recognise business.

COLG also revealed a successful £27m cash raise was completed in October which has been invested in the development of Recognise.

“Recognise is now working to complete the development and testing work necessary to position it to receive a full banking licence, with a target to achieve this in the first half of 2021,” the lender said.

“The full banking licence will also be dependent on a further capital raise.”

It added: “As Recognise has now begun lending activities, Property & Funding Solutions will wind down its loan portfolio and Recognise will redeploy the funds as loans are repaid.”

 

Landlord loans to follow

Discussing its bridging market entry, chief executive officer Michael Goldstein said: “There is already deep experience within the business development and credit control teams to support this market engagement and Recognise is well positioned given that it has no legacy exposure or hangover from Covid-19.

“The senior management team carries the experience of previous crises and is looking forward to helping drive the growth of viable and ambitious SMEs as the UK economy begins to recover.

“Looking forward, 2021 will see loans for professional landlords and the development of an important asset finance capability.”

The firm delivered a £348,000 loss in the first six months of its financial year from April to September, however this included the £2.77m cost of its banking licence application.

The bridging operation secured a £200,000 operational profit while Milton Homes produced a £3.4m profit, although the broking arm Acorn to Oaks recorded a £16,000 loss as business was hit by Covid-19.

 

Recognise re-deploying funds

Goldstein continued: “We are delighted that our Recognise subsidiary achieved a major milestone when it received authorisation with restriction from the Prudential Regulation Authority (PRA) with effect from 10 November.

“As Recognise has now begun lending activities, Property & Funding Solutions will wind down its loan portfolio and Recognise will redeploy the funds as loans are repaid.

“The results of Milton Homes for the period were pleasing, reflecting both an increase in the number of reversions and the removal of the uncertainties on the future strength of the UK housing market that depressed the March valuation.

“Covid-19 adversely affected the commercial finance broking division of Acorn to Oaks as there was little activity in that market in the first half of the year although there are now signs of improvement which should benefit the second half.

“Overall, looking forward, we are well placed to implement our core strategy of developing a business focusing on the SME market that will deliver value to our shareholders,” he added.

 

 

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