This decision enables the institution to accept customer deposits and transition from operating under the temporary permissions regime as a branch of Estonian retail bank LHV Pank to being a fully authorised and regulated institution by both industry bodies.

Operating in SME lending, it also aims to introduce banking services to e-commerce businesses.

The institution received its full banking licence just over one year after submitting its application in March 2022.

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Thanks to the decision, the company is currently undergoing the business transfer process to move all operations to the new bank — after this, the UK branch of LHV Pank will be deregistered, and LHV Bank will continue to operate as a separate entity. 

The bank — which has been operating in the UK since 2018 — plans to establish a robust lending business quickly with operations in Manchester and London, and expects to reach profitability by the end of its first year of operations. 

Last year, the bank processed over 25 million payments valued at over £90bn. 

Following the acquisition of Bank North’s SME lending business line and regulatory clearance from the FCA last year, LHV Bank also offers commercial real estate investment loans and trading loans starting from £500,000 to UK SMEs, with loan brokers serving as the primary sales channel for SME loans.

The finance provider is a member of all major UK and EU payment schemes — as such, its offering includes real-time multi-currency payments, current and savings accounts, acquiring, indirect scheme access, open banking, and FX solutions.

LHV Bank is fully capitalised, and customer deposits are protected under the FSCS up to a limit of £85,000.

The Bank is part of the Estonian AS LHV Group, which has over £10bn in financial assets — the group operates in the banking, asset management and insurance sectors, serving nearly 400,000 direct customers and employing over 900 professionals.

Madis Toomsalu, chairman of LHV Bank, said: “Receiving the licence without restrictions in just over a year since submitting our application validates the exceptional work of our team and the professional operation we’ve built. 

“Our ability to generate additional capital internally positions us strongly for further growth in the dynamic UK banking market.”

Erki Kilu, CEO at LHV Bank, added: “In addition to our existing banking services and SME Lending activities, we plan to start accepting retail deposits later this year and expand our banking solutions offering to e-commerce businesses, maintaining the same level of convenience, reliability, and security that our existing clients have come to expect.”