Paragon's new bank enters loans market
BRITAIN will get a new challenger bank after buy-to-let mortgage provider Paragon Group won permission from the City watchdog to start offering savings and loans products.
But the company has no plans to open a chain of high street branches and will instead offer saving accounts on the internet and through intermediaries.
Its first move into the loans market will be car finance through motor dealers and brokers. Authorised by the Prudential Regulation Authority, Paragon Bank began offering car loans yesterday, with savings products due to follow in the spring.
Although the group has provided £12.7million of initial capital, the new bank intends to finance its lending through deposits from retail savers, typically with amounts ranging from £10,000 to £20,000.
Paragon Group chief executive Nigel Terrington said: “We don’t think you need a branch network to have a funding platform. We are a specialist organisation, we are not offering current accounts and we won’t be operating ATM machines.”
This marks a return to consumer lending for Paragon which pulled back from the market during the financial crisis.
The new bank will be headed by Richard Doe, a former chief executive of ING Direct UK.
