Supply chain finance outfit Tungsten is selling its banking unit for £30 million as a key part of a strategic review aimed at reviving the flagging business as it reported widening first half losses.
Tungsten was founded by City financier Edmund Truell with the express aim of shaking up the supply chain finance industry. The group spent £99 million to buy out e-invoicing network OB10, and acquired the UK arm of First International Bank of Israel (Fibi). The Fibi acquisition was seen as a key element in the firm's plans to provide suppliers with access to accelerated invoice settlement on a transparent and simple to execute basis.
Announcing the sale of the business for £30 million, the Board took a view that "operating a regulated deposit-taking banking license is incompatible with the pursuit of profitable growth".
The benefit of owning a regulated firm like Tungsten Bank was outweighed by the fixed costs of operating it, the company says, making the retail funding it might provide more expensive than alternative sources.
The proposed divestment of Tungsten Bank produces a net reduction in run-rate costs of £2 million per annum.
The sell-off comes as Tungsten reported a first-half loss after tax of £17.6m, compared to £14.7 million in the comparable period a year ago.