Estonia's LHV Bank to open branch in London ({{commentsTotal}})

LHV Pank.
LHV Pank. Source: (Martin Dremljuga/ERR)

The Financial Conduct Authority of the United Kingdom has granted the Estonian bank LHV Bank an approval to open a branch in the U.K., LHV Group told the stock exchange on Friday.

LHV Bank's next step will be to register the branch in the U.K. Companies House, which is expected to take place in the coming few weeks, and begin operating in March. The Estonian Financial Supervisory Authority approved the establishment of the bank's U.K. branch late last year.

LHV Bank will open the branch in London in order to develop its financial service provider's business line. Having a branch in the U.K. will allow LHV Bank to join the pound payments system and provide financial intermediaries with real-time payments service in both euros and pounds sterling (GBP). LHV's role will be a link between new generation fintech services and banking infrastructure.

According to LHV Bank CEO Erki Kilu, servicing financial service providers has already evolved to be an important part of the bank's business.

"We are an influencer bank — we strive to contribute to the development of financial services," said Kilu. "During the last six years, we have seen rapid growth in the volume of payment services, and more growth can be predicted, considering the effect on the financial sector from the European Payment Services Directive (PSD2) which entered into force this year. In order to offer new solutions, financial intermediaries need banking services — that means us."

LHV Bank is already a direct member of the Euro Payments System and also participates in the Instant Payments System working group. LHV intends to open the necessary accounts with the Bank of England and join the pound payments system at the earliest opportunity. LHV plans to start servicing financial intermediaries by the end of this year.

"London has become one of the most important financial centers, where financial technology companies from both Europe and the rest of the world are represented," noted the CEO. "We aready have a number of substantial and well-known international payment intermediaries as our clients, and more will come in the future. We could also provide our payment services to banks, credit intermediaries and other companies."

The U.K. branch will be managed by Andres Kitter, a member of the management board of LHV Bank who had thus far overseen services for financial service providers.

"We are in the middle of recruiting suitable people for the London office and our aim is to open our London office in the middle of March. In addition to the branch manager, LHV will recruit customer service specialists and new employees covering compliance and money laundering prevention. We have already extended our software development team in Tallinn," said Kitter.

LHV intends to start generating additional income with the new branch in the end of 2018, after the U.K .branch is established and joining the Pound Payments System has taken place. A bigger increase in revenue has been planned for the following years, after which the branch should become profitable. In 2018 the planned costs will be mainly made up of payment system accession costs and costs of developing the IT infrastructure.

LHV will celebrate the opening of its U.K. branch on March 19 with a reception and panel discussion, entitled "Will global cities prevail over countries?", as a part of the  Innovate Finance Global Summit.

LHV Group is the largest domestic financial group and capital provider in Estonia. LHV Group's key subsidiaries are AS LHV Pank and AS LHV Varahaldus. LHV employs about 350 people and over 131,000 customers use LHV's banking services. Pension funds managed by LHV have about 178,000 customers.

Editor: Aili Vahtla

Source: BNS



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