OneSavings Bank reveals suspected £28.6m fraud
19 Mar 2021

OneSavings Bank has delayed its results after disclosing that it has been the victim of a suspected £28.6 million fraud by a corporate customer.

Shares in the specialist buy-to-let lender sank by 5 per cent this morning after it warned that it believed it may have been defrauded by the unnamed non-bank lender.

The evidence was discovered only in the past few days and it is understood that the bank has reported the matter to Action Fraud, run by City of London police. It has also called in the accountant Smith & Williamson, which specialises in forensic investigations. The Financial Conduct Authority and the Prudential Regulation Authority have been informed.

Andy Golding, chief executive of OSB Group, said: “Whilst I am disappointed at the very recent discovery of a potential fraud at one of the non-bank lenders we provide secured funding to, we believe that this is an isolated incident and are committed to expediting our investigation and publishing our full preliminary results on 8 April, 2021.”

OSB is a medium-sized lender with a £19 billion loanbook mostly aimed at buy-to-let landlords. It was created out of the old Kent Reliance Building Society and recently expanded via a merger with Charter Court. It is a member of the FTSE 250 valued at £2 billion and is based in Chatham, Kent.

It was not clear from the statement whether the suspected fraud was discovered internally or by OSB’s auditors, Deloitte.

The maximum possible loss could be £28.6 million although OSB said the debt had been secured against “lease receivables” and “underlying hard assets”. Expected underlying profit for the year, before any fraud-related writedown, is £366 million.

The problem was in a small division of OSB that provides funding lines to third parties secured primarily against property-related mortgages. “We have very recently become aware of potential fraudulent activity by one of these third parties,” OSB said.

By Patrick Hosking, The Times, 18 March 2021

Read more at The Times

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