Niche credit and financial services business Paragon Group has announced that it is to launch a dedicated full-service bank following approval by the Prudential Regulation Authority.
The company has so far dedicated £12.7 million in initial capital to Paragon Bank and expects to provide additional capital as required to support growth. At 8.20 shares in Paragon Group were up 3.18% to 376p.
Chief executive at launch will be Richard Doe, formerly head of ING Direct UK.
The group remains best known for its position pre-crash as one of the UK’s leading independent mortgage providers, with a particular strength in buy-to-let business, and also offers low-cost credit services.
Dependent on wholesale funding markets to turn over its borrowing, the company had a near-death experience in 2007 but pulled through following a successful rights issue and restructuring in 2008.
‘Today’s launch of Paragon Bank marks an exciting development for the group,’ said Nigel Terrington, group chief executive.
‘[It] represents the third leg of the strategy, joining Paragon Mortgages, the buy-to-let lending business and Idem Capital, the debt purchase business. The establishment of Paragon Bank facilitates a return to consumer finance lending, benefitting from the Group’s heritage, expertise and scale as a low-cost specialist lender.
The company will initially focus on lending, with saving products expected to launch toward the end of the first quarter.