Bank founded by Mandelson ally fined £2m for ‘fabricated documents’

A bank founded by a top Labour donor has been fined £2m for faking documents in an effort to mislead the City watchdog about its finances.The Bank of London, founded by Anthony Watson, provided “several fabricated documents” to the Prudential Regulation Authority (PRA) to create a “false picture of the capital position”.In a decision handed down on Tuesday, the PRA fined the Bank of London, which previously counted Lord Mandelson as a board member, for “failing to act with integrity”.This followed an investigation into failings at the bank between October 2021 and May 2024.An investigation by the PRA, part of the Bank of England, found that the company failed to inform officials it was at risk of insolvency between December 2023 and May 2024.That was despite being just seven days from running out of cash during this period.The PRA said it was the first time it had been forced to fine a bank for a lack of integrity.It said an initial £12m fine had been reduced to £2m based on the fact that it would pose “serious financial hardship” to the business.Mr Watson, a former Barclays and Nike executive and a corporate LGBT champion, launched the Bank of London in 2021 to shake up the clearing banking sector, which handles the back-end transactions between lenders.The start-up bank raised tens of millions of pounds and at one point was valued at $1.1bn (£822.5bn).This led to Mr Watson hiring a high-profile board, including Lord Mandelson, the former business secretary and Harvey Schwartz, the chief executive of private equity giant Carlyle. However, the bank quickly encountered financial difficulties.History of financial troublesAccording to the PRA, the Bank of London was struggling to meet its capital requirements by January 2023.To ease regulatory concerns, executives sent emails to the PRA, supposedly from their lawyers, claiming £1m had been wired to the business.The company was running short on cash again by December, at which point it failed to alert the City watchdog.Executives also wrongly recognised £4.7m as revenues to make its accounts appear healthier than they actually were.The Bank of London was later bailed out by its investors, with US fund Mangrove Capital Partners taking control of the business and installing a new leadership team.Mr Watson, who has previously given hundreds of thousands of pounds to top Labour MPs, left the bank in September 2024.At the time, he said: “As difficult as it is for any founder-CEO to step back, I know in my heart that this is the right time for me.”The Telegraph contacted Mr Watson for comment.Turmoil at the bank first came to light when it was issued with a winding-up petition by the taxman in September 2024. Lord Mandelson subsequently left the business as part of a boardroom clear-out.After the PRA’s ruling, a spokesman for the Bank of London said: “The matters described in the notice relate to a period when the Bank was under previous ownership and management.“The bank accepts the PRA’s findings and regrets the failings identified.“The bank has been implementing a comprehensive remediation programme, and is continuing work to strengthen further its governance and risk management arrangements and its financial and regulatory reporting controls.”The spokesman said it plans to return to growth this year.