OakNorth to seek US deals after winning approvals for expansion

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OakNorth Bank Plc will look to buy an existing business or a bank in the US, according to Chief Executive Officer Rishi Khosla, after the British lender got regulatory approvals to expand its presence in the world’s biggest economy.

The US Federal Reserve and the New York State Department of Financial Services this month allowed the London-headquartered bank to set up a representative office in New York, market its products and services, and undertake other activities such as back-office operations and market research.

“For us, this is step one,” Khosla said in an interview. “Over time, we will continue to look at acquisition opportunities.”

Acquiring a bank that’s already got all the necessary licenses from US regulators would allow OakNorth to sidestep the potentially lengthy process of applying for one itself. In the past, it’s taken some fintechs years to get licensed from regulators including the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp.

Founded in 2015, OakNorth has been vocal about its ambitions overseas. The collapse of regional lenders in the US such as Silicon Valley Bank and Signature Bank meant that “the void is even larger than what existed prior” to the meltdown for small and medium businesses, Khosla said.

The company has lent a combined $15 billion to date. In the US, businesses have borrowed about $600 million in the last 12 months from OakNorth without any marketing or promotion, far exceeding his expectations, Khosla said.

The firm reported £187.3 million ($248 million) in pretax profit for 2023, a 23% jump from a year earlier. It was valued at about $2.8 billion in a funding round led by SoftBank’s Vision Fund in 2019, though the fund subsequently devalued its stake during the pandemic.