As part of the process of taking over, Qatar Holding is unwinding a trust structure set up under the bank’s previous owner, Mohamed Al Fayed, the report says.
It adds that the Financial Services Authority has given its approval for Qatar Holding to buy the controlling shares in the bank, which it said have been held until now in a trust – a structure that "reportedly [was set up] under pressure from the Bank of England over his [Al Fayed’s] fitness to run a bank".
Harrods Bank this morning referred a journalist’s calls to Harrods’ corporate public relations office. It in turn responded with a statement expressing "delight" that "Harrods Limited has gained the approval of the FSA to unwind the trust structure under the previous ownership, [and] to bring Harrods bank under the control once again of the Harrods umbrella, one of the most prosperous luxury brands in the industry."
The statement went on to report that a new board had been named as part of the restructuring, but it did not say who the new boardmembers are, nor did it give any indication what, if any, plans there might be to expand the Harrods banking operation.
It is likely, though, that Qatar Holding will have ambitious plans for the bank, given the associations many wealthy people have with the Harrods brand, at a time when the image of some traditional banks has suffered.
In addition to its store in Knightsbridge, Harrod’s also operates a high-end real estate sales business and something called Harrods Aviation, which provides services to those who arrive and depart from London’s Stansted and Luton airports by private jets.
If Harrods Bank does expand, it will not be the only retailer to be looking to branch out into banking even as many banks are cutting back; others include UK retailers Tesco and Marks & Spencer.
Virgin Money, which was launched as a financial services business by Virgin records and trains entrepreneur Richard Branson in 1995, is also looking to expand, having received a banking licence in 2010. Earlier this year it purchased what remained of the Northern Rock banking franchise.
Losses in year to January
According to the Daily Mail article, the bank posted a loss of £1.7m in the year to the end of January 2012, "after losses on one bad loan", and this year, the loss has increased due to increases in overheads, investments in IT systems in preparation for "future expansion" and the need for a large provision of £800,000 against an impaired loan.
Harrods is one of London’s best known stores as well as a popular tourist attraction located in the affluent Knightsbridge neighbourhood, where many Arab residents live and work. It was estsablished in 1849, and is said to have more than 1 million square feet of selling space.
Al Fayed acquired Harrods in 1985, following a long-running battle with the late Tiny Rowland, a British businessman who was chairman of Lonrho for more than 30 years. He sold it to Qatari Holding, the Qatari royal family’s investment company, in 2010 for a reported £1.5bn.
