Challenger bank focuses on building for the future

James Espley. director of debt finance at OakNorth Bank
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OakNorth Bank is one of the shortlisted companies in our 2021 Yorkshire Business Masters and over the last 18 months the business has been busy growing its presence in the region…as they promised they would. caught up with James Espley, director of debt Finance at OakNorth Bank to talk about the firm’s investment in the region and its growing team.

Espley started by outlining that the business is on track to deliver increased levels of funding from the office and is growing its team, having recruited Matt Gudgeon from Christie and Co as an associate and Al Morris as a director from Santander, who will lead the corporate and trading side of the team while Espley focuses on the property side.

Espley explains that this recruitment wasn’t the end: “We’re also currently looking for another person as well so that in a very short space of time there’ll be four of us.”

He said it was a testament to the faith OakNorth Bank has in the region that they want to put their “money where their mouth is” and follow through on the promises they’ve made to invest in Yorkshire and grow the office, even during a pandemic.

The investment hasn’t just been in people with the bank also taking its first office space in Leeds city centre at Avenue HQ, having previously used the co-working space there.

But what’s fuelling the lenders confidence, well according to Espley it’s the fact that as a disruptor in the sector OakNorth Bank has a broad offering.

“Whilst they’re great operators and clients, we’re not just interested in the likes of Scarborough Group [they recently supported the developers Thorpe Park scheme] and £25m deals. We’re also interested in local housebuilders who are doing smaller deals because our offer goes from £500,000 upwards.

He adds that the growth in the team has also been crucial to success.

“The fact we’ve now got Matt and Al in the team as well gives us more man power to look at all the opportunities that are coming in, because with all due respect when it’s only one person you have to prioritise – as all the deals go through the same process.”

Explaining more about OakNorth Bank’s options he said in terms of property in particular, other banks are generally only really interested in £10m+ deals, which in itself is creating more opportunities for Espley and the team.

He highlighted that they’re actually seeing an increase in interest from smaller operators, particularly in the residential side where housebuilders are looking to more rural and semi-rural locations as they see demand for these locations rising as a result of Covid-19.

Picking up on the opportunity of the rural and semi-rural locations Espley said: “I think Yorkshire has got a massive advantage in terms of the housing [sector] in particular because we have got so many attractive rural and semi-rural locations, within half an hour drive of a major city centre. I think Yorkshire is unique in that respect.”

He also noted that the region is in a prime position for the other part of the sheds and beds growth story.

“The region is in a prime location for distribution, logistics and the industrial market. It’s pretty much in the centre of the of the UK for the motorway networks and with the market experiencing massive shortages of space the opportunities are fantastic.”

Perhaps however what he said next was the surprise, it’s a similar story in the office market. He explains that due to a lack of speculative building, demand continues to outstrip supply of premium grade space, even as the world evolves to new working patterns post pandemic.

So, looking ahead where does he see the future of OakNorth Bank in Yorkshire, well last year with only two months of normality before a pandemic he took £80m of deals to the firm’s credit committee with £75m of those approved. This year he says that by the half way point of the year the teams has drawn down and got out the door circa £50m, with a further £50m approved and due to come through.

He finishes the conversation saying: “We’re certainly on target to beat the investment levels of 2020 and continue our growth story. And with Matt, Al and another hopefully that will cement our growth and keep it going.”

In fact, he closes by saying although he doesn’t foresee a team of 20 or 30 people for OakNorth Bank in Yorkshire he still sees as he did in February and as his colleague Deepesh Thakrar said in 2020 ” potential for growth within the region”, and that could mean a new address in the future too.