SCOBAN, the Edinburgh-based company promising a new UK private bank, is about to launch a share prospectus after failing to land any firm commitments from institutions too worried about international events.
Its directors believe the bank, already backed by 150 wealthy individuals, could be launched in July following the prospectus issue to 1000 potential investors this month.
However, they admit that in the current economic climate, many financial institutions are more interested in owning the new venture rather than backing it as an independent private bank.
The Financial Services Authority (FSA) is now examining the prospectus and discussing the proposed bank's capital and liquidity documents, and is likely to give the green light to a provisional banking licence providing the initial capital can be raised.
The directors, who are led by former chairman of Adam & Company Ray Entwistle, are confident of raising the £8 million needed to create the bank, despite a four-month delay in the critical second funding round which has stalled after raising £3.4m from private investors.
However, the founders admit they will still have to raise "up to £100m" to satisfy the FSA and secure a full independent banking licence, and say there has been interest from several financial institutions in immediately acquiring the bank.
In a letter to shareholders, Mr Entwistle says the company has raised two-thirds of the minimum £6m working capital needed for its first year of operations.
"Several individuals are talking of investing between £100,000 and £2m but no firm commitment has been made," he writes.
"Many institutions have also been approached, presentations made, well received, helpful and general talk around substantial investment 'once you have received your licence'.
"However, it is clear that risk appetite within nearly all institutions is extremely low and it is likely to remain so until inter-national issues are resolved."
Scoban, which is understood to be willing to name the bank after a suitably significant shareholder, was restricted to approaching 150 individuals, under EU regulations, without a prospectus.
Mr Entwistle tells investors the fundraising will now focus on private investors who wish to see a new private bank.
"We expect this prospectus will allow us to raise funds to take monies past £6m and attract sufficient interest to reach £10m," he said.
However, he goes on: "I should tell you that considerable interest has been shown in Scoban's strategy from large, well-established organisations, but at this stage we are staying close to the mandate given by our shareholders – this should be a new private bank in which its clients have a significant stake."
The company has a headquarters in Charlotte Square and a banking software contract lined up, and is believed to have attracted job applications from senior figures in the sector.
However, Mr Entwistle concludes: "The money invested in the second fundraising remains ring-fenced until our target has been achieved – even then, very careful consideration will be given before your board makes any commitments."
Mr Entwistle launched Scoban in January 2011 and raised £1.3m from his initial appeal, only half of which has been spent.
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