Federal Reserve orders Oaknorth to set up UK holding firm
Digital bank Oaknorth has been ordered by the US financial watchdog to switch its domicile to the UK to get the green light on its takeover of a Michigan-based bank.
The small business lender is exploring plans to establish a new UK holding company as a way to seal the deal on its acquisition of Community Unity Bank (CUB).
The Federal Reserve has told Oaknorth it would not approve the deal unless the firm swaps its holding from Jersey to the UK.
Oaknorth told shareholders it had received a “request” from the Fed “in connection with those regulatory approvals, and to support Oaknorth’s US expansion more generally”.
“Management expects to propose the introduction of a new UK-domiciled holding company,” the company told investors and added further information would be outlined in due course.
The regulatory intervention – first reported by Sky News‘ Mark Kleinman – comes after momentum in the US helped the bank clinch a profit before tax of £222.5m in 2025.
Oaknorth takes aim at ‘subdued’ UK
In the last year, the total volume of new loans reached $1.4bn, more than trebling from $400m in 2024. Originations in the US made up around 40 per cent of new lending for the group.
But the firm took aim at “the UK’s subdued environment” which it said created a “more challenging lending backdrop than anticipated, while the US provided both growth opportunity and the need for careful navigation of a credit market that is evolving rapidly”.
Oaknorth also slapped a ten year delay on its ambition to be a net zero bank amid expansion across the Atlantic.
The small business lender said it expects to meet net zero commitments by 2045, as opposed to previous guidance of 2035 set four years ago.
Oaknorth said since 2022 it had “expanded into new geographies, introduced business banking, and adapted to shifting regulatory expectations and political priorities”.
The bank declined to comment on regulatory matters and its CUB deal.