New UK Bank Formed, Backed By A Cambridge College, Pension Scheme

Tom Burroughes

11 June 2012

A new UK bank, backed by one of the most famous University of Cambridge colleges and a pension scheme, has been launched to provide facilities to clients such as businesses, professions and pension plans, highlighting how such ventures are proceeding despite tough markets.

The new bank is called Cambridge & Counties Bank. Among other services, it will provide lending secured on commercial property assets of pensions, such as loan facilities to UK-registered self investment personal pension schemes.

Loans will be to a maximum 50 per cent of the pre-borrowing fund value (which is the official cap on such leverage), and no more than 70 per cent loan to value of the asset purchased, the bank said in a statement.

While not strictly a wealth management story, the launch does suggest that there is a perceived market for bespoke lending and other bank services where specific assets can be exploited, and do so in a market where credit conditions are generally tight. For example, more than 60,000 loan and overdraft applications – worth a combined £3 billion ($4.66 billion) - from small and medium-sized firms were rejected in the second half of last year.

The bank will be jointly owned by Cambridge Local Government Pension Fund, and Trinity Hall, a Cambridge college. They each own half of the bank. The bank’s primary focus will be lending to small and medium-sized companies. Further services are planned, including a launch into retail banking.

The bank said it aims to lend more than £100 million over the next four years.