UK-based challenger lender Bank North, which aimed to disrupt the small business lending market, is winding down its operations, the Daily Mail reported. 

The decision comes after Bank North failed to raise fresh funds. 

Last year, the Manchester-based startup raised £20m in a Series A funding round and secured a restricted banking licence from the regulator.

Bank North was looking to raise £30m in funding to secure a full banking licence, which would have authorised it to take deposits from retail customers. 

In a letter to shareholders as seen by the publication, Bank North chairman Ron Emerson said that the bank was not able to close this critical capital raise within the necessary timeline.

“It is therefore with great regret that I have to inform you that… the board of Bank North has decided to initiate a solvent wind-down of the bank, with immediate effect,” Emerson was quoted by the publication as saying. 

As per the report, the troubled bank is in talks with an unknown third party to sell its £17m loan book and transfer its lending team based in Manchester. 

Emerson added: “Completion of this transaction is critical to ensuring a solvent wind-down, where the priority will be to ensure full payment of our creditors, including staff, and that all outstanding liabilities are paid.”

The sale could be finalised in the next few weeks and the lender will return its licence to the Prudential Regulatory Authority. 

Founded in 2018, the SME-focused bank is backed by LHV Group, Skipton Building Society, Channel 4 Ventures, and the Greater Manchester Combined Authority among others.