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City of London Group moves to obtain banking license

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City of London Group moves to obtain banking license

City of London Group Plc will acquire a 73% stake in Echo Financial Services Ltd., a recently established firm with no material assets or liabilities, as part of the company's plan to obtain a banking license and create a challenger bank that will offer commercial, small and medium-sized enterprise, bridging and development financing.

The remaining stake will be held by a team comprising Jason Oakley, Adrian Golumbina and Bryce Glover, who will take stakes of 15%, 10% and 2%, respectively, in Echo Financial Services. City of London Group has put and call option arrangements that would allow it to acquire the team's stake in Echo Financial Services for a maximum amount of £5.4 million, payable in shares.

City of London Group will provide total additional funding to Echo Financial Services of up to £2.5 million. If the board determines that the joint venture will require further funding, City of London Group and Oakley will provide shareholder loans in equal proportions of up to £1.5 million, or a maximum of £750,000 each.

As part of the agreement, Oakley and Glover will subscribe £400,000 and £50,000, respectively, for 421,052 and 52,631 new City of London Group shares at a subscription price of 95 pence per share.

Peel Hunt LLP is acting as adviser and broker for City of London Group.