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The Bank of London, a small clearing bank whose board includes private equity executive Harvey Schwartz and Labour party grandee Lord Peter Mandelson, has been hit with a winding-up petition from UK tax authorities over unpaid debts.
HMRC petitioned to wind up the Bank of London’s holding company on Thursday according to court records.
“The Bank of London Group Holdings Limited is fully up to date with all tax payments to HMRC,” said a spokesperson for the bank. “The issue was due to a simple administrative handling delay caused by an internal miscommunication, which has been addressed.”
The HMRC filing was made just two days after the group announced that its founder Anthony Watson — known for displaying his lavish jet-setting lifestyle on Instagram — would step down as chief executive and transition to a new role as a senior adviser.
The petition could present significant challenges for the bank, which Watson launched in 2021 to much fanfare as a competitor to the Big Four UK lenders that dominate the clearing market.
Tax authorities resort to winding up petitions if a business has failed to pay money it owes. Winding up petitions can be filed for debts of even a small amount.
After a winding up petition is filed and accepted, a hearing is arranged to determine whether the company can pay its debts. If the court decides that it cannot, a winding up order is issued and the business will in effect go into liquidation.
Dan Neidle, a senior tax lawyer, described it as the “nuclear option” for HMRC and said he has never seen it used against a major company or financial institution before this case.
Watson pulled in political and finance heavyweights for the bank’s board including Mandelson and Schwartz, a former Goldman Sachs executive who now leads private equity firm Carlyle Group.
Watson has long-standing ties to Britain’s ruling Labour party, having previously headed its “business and enterprise advisory council” when the party was in opposition.
In 2021 the Bank of London announced that it had launched with funding that gave it a $1.1bn valuation, which it claimed made it the “first pre-revenue bank in history to attain ’unicorn’ status upon debut”.
Schwartz said at the time that “banking is basically an immensely complex data problem” and The Bank of London “is the solution.”
The Bank of London Group Limited, a subsidiary of the holding company, received a banking licence from British regulators last year. Its latest accounts show the group received £24.5mn in funding from investors in early 2023, and signed an agreement for a further £25mn equity last November.
Retail depositors are guaranteed by the Financial Services Compensation Scheme up to £85,000.
Watson, whose profile on the Bank of London website lists roles at Barclays, Wells Fargo and Nike, also helped found crypto trading start-up Uphold.