Headlines were made last week with the imminent launch of a £40 million bridging fund from a commercial brokerage, which stated that it will be lending principal funds on LTVs that are not widely available on the market.

However it has since been brought to light that the brokerage, trading as Federal Finance, does not own the fund it intends to lend and instead is planning to utilise the facility of an existing lender, Bridgebank Capital – although no plans have yet been formalised.

The news announcement from Federal Finance stated that the planned launch of its lending arm, Federal Bridging Bank, will offer LTVs of up to 90 per cent since securing the £40 million fund from UK-based and overseas private investors, as well as from hedge funds. But the director of the firm failed to disclose the exact source of the proposed fund. 

B&C were contacted by an anonymous source who had reservations about the credibility of such a bold announcement, and upon further investigation it has been uncovered that Federal Bridging Bank is planning to effectively white-label Bridgebank Capital’s funds in order to offer such exclusive LTVs.

Tan Bahia, Director of Federal Finance, told us that “…white-labelling Bridgebank and having some additional flexibility on their products gives us an early presence in the market and gets people used to us as a lender.”

B&C also contacted Bridgebank Capital to ask about the proposed funding but the company declined to comment because it is “… only under initial discussions with Federal Finance and nothing has formally been agreed yet”, according to Emma Hodson, Head of Marketing.

However, B&C spoke to a broker who suggested another reason for these initial discussions. He said: “This may be a result of bad reputation amongst the broker community.” When we asked him to clarify, he explained from a personal perspective that he had a bad experience with Bridgebank Capital in the past.

According to Mr Bahia, he is currently “…formalising a new LLP company which is called Federal Development Bank” for development projects which will own its own fund. He said: “It will be FSA and CCL registered as a lender … we are well on our way to launch in September.”