Confusion over licence delays sale of bank

EFFORTS to sell Mount Banking Corporation, the Mayfair bank that was shut down in October amid allegations of impropriety, are being held up because the Bank of England has refused to say whether the bank can keep its licence, writes Peter Rodgers.

Peat Marwick, the administrator, wants to find a buyer for the bank as a trading concern, but cannot do so until the licence position is clear. Partly as a result, the administrator has been granted a three-month delay by the courts in putting its proposals to the creditors of the bank, whose main shareholders are the Shah family.

Despite the sudden closure of the pounds 200m bank, the Bank of England did not remove Mount's licence. The name still appears in the official list of licensed banks, with a note saying it is in administration.

The Bank of England made clear at the time that Mount was not being closed because it was insolvent. The provisions of the Banking Act under which it closed Mount related to the fitness and properness of those in charge. The directors are negotiating with the Bank of England over the conditions under which it could keep its licence. It is unclear whether the Bank will demand a complete change of control and management.