22 December 2022                                          

City of London Group plc

("COLG", the "Company" or the "Group")

Proposals for cancellation of admission of Ordinary Shares to trading on AIM,

the members' voluntary liquidation of the Company

and

Equity subscription in Recognise Bank Limited

-      Proposals to simplify group corporate structure

-      Investment of £25m in Recognise Bank from COLG's largest shareholder for working capital and to support growth of commercial loan book and further product development

The Company announces that it is today posting a circular (the "Circular") to its shareholders ("Shareholders") in connection with proposals that its directors (the "Directors") have concluded are in the best interests of the Company and its Shareholders, including proposals to:-

(i)            cancel the admission of the Company's ordinary shares of 2 pence each (the "Ordinary Shares") to trading on AIM ("Cancellation") pursuant to Rule 41 of the AIM Rules for Companies; and

(ii)           place the Company into a members' voluntary liquidation ("MVL") as part of a solvent re-organisation of the group structure, pursuant to which it is expected that the joint liquidators proposed to be appointed at the General Meeting (as defined below) ("Joint Liquidators") will carry out a distribution in specie of all the Company's shares in the capital of its wholly-owned subsidiary, Recognise Bank Limited ("RBL"), to the Shareholders in a proportion which is as close as practicable to such Shareholder's pro rata interests in the capital of the Company immediately prior to such distribution (the "Distribution").

The Circular includes notice of a general meeting (the "General Meeting") of the Company which is being convened for 10.00 a.m. on 25 January for the purposes of considering and, if thought fit, passing the requisite shareholder Resolutions to approve the Proposals (as defined below).

Whilst the Company has historically acted as a holding company for a number of operating subsidiaries, RBL is now the only subsidiary owned by the Company and therefore a holding company is no longer required. The Directors have therefore concluded that it is in the best interests of the Company and the Shareholders as a whole to simplify the Group's corporate structure by removing the holding company from the Group structure through the cancellation of admission of the Company's shares to trading on AIM, the implementation of an MVL of the Company and the Joint Liquidators carrying out the Distribution. As a result, immediately following the Distribution, Shareholders will become direct shareholders in RBL and such Shareholders will no longer hold any Ordinary Shares.

The Company's only material asset is its interest in RBL and the Company has no material liabilities. The Directors have concluded therefore that it is no longer beneficial for the Company to continue in existence and that it would be preferable for the Group to have a simpler corporate structure without a holding entity whose shares are admitted to trading on AIM. Accordingly, the Directors believe that the Cancellation, the MVL and the Distribution (together the "Proposals") are in the long-term operational interests of Shareholders as a whole, the Group's stakeholders and RBL.

In addition, conditional inter alia upon the Distribution being implemented and shortly following the Distribution, PV27, which currently holds 57,125,000 Ordinary Shares, representing approximately 47.83 per cent. of the Company's issued share capital, has agreed conditionally to invest £25 million in RBL at £1.06 per new RBL Share, which equates to 30 pence per Ordinary Share (the "Equity Subscription").

Following the Distribution, in order to support liquidity in the RBL Shares for Shareholders who will hold RBL Shares as a result of the Distribution ("RBL Shareholders"), RBL intends to put a matched bargain facility (the "RBL Matched Bargain Facility") in place for a period of time to assist RBL Shareholders who wish to trade in RBL Shares. The RBL Matched Bargain Facility will be provided by Asset Match Limited.

The Company has received irrevocable undertakings from certain Shareholders, who, in aggregate, hold 90,017,349 Ordinary Shares, representing slightly above 75 per cent. of the Company's issued share capital, to vote in favour of the Resolutions. In view of these irrevocable undertakings, the Directors believe that each of the Resolutions will be passed at the General Meeting.

Capitalised terms in this announcement, unless otherwise defined, have the same meaning as will be set out in the Circular.

Expected Timetable of Principal Events

¹ The actual time and date on which the Register is closed and the Record Date is set for participation in the MVL will ultimately be determined by the Joint Liquidators and is therefore subject to change.

² The actual date on which the Distribution will be complete will ultimately be determined by the Joint Liquidators and is therefore subject to change. The completion of the Distribution is one of the conditions to the Equity Subscription.

Notes:

(1)  The dates set out above and throughout this circular may be adjusted by the Company in which event details of the new dates will be notified to AIM and, where appropriate, to Shareholders by announcement through a Regulatory Information Service.

(2)  All of the above times refer to UK time.

(3)  Each of the Cancellation, the MVL and the Distribution is conditional, inter alia, on the passing of the Resolutions at the General Meeting.

Recommendation

The Directors consider that the Proposals are in the best interests of the Company and its Shareholders as a whole and therefore unanimously recommend that Shareholders vote in favour of the Resolutions. Philip Jenks and Richard Gabbertas, as independent Directors who are interested in Ordinary Shares, have undertaken to vote, or procure the vote, in favour of the Resolutions in respect of, in aggregate, 57,000 Ordinary Shares, representing approximately 0.06 per cent. of the Company's issued share capital, to which they are beneficially entitled. In addition, PV27 (in which Ruth Parasol and Nyreen Llamas are interested) and Paul Milner have undertaken to vote, or procure the vote, in favour of the Resolutions in respect of, in aggregate, 57,231,238 Ordinary Shares, representing approximately 47.9 per cent. of the Company's issued share capital, to which they are beneficially entitled.

Philip Jenks, Chair of City of London Group, commented: "The proposed changes to our structure will make Recognise Bank more streamlined and efficient and will save costs, so we can focus our resources and continue to develop new services and products for all our customers.

"The new investment shows how much Recognise Bank has achieved in a short period of time and sets the Bank up for a bright and successful future. We have quietly gone about the business of creating a new digital bank for SMEs and will continue to focus all our energy on growing Recognise, with the backing of COLG's largest shareholder, one of the best management teams in the business and an energised team of colleagues."

For further information, please contact:

This announcement contains inside information as defined in Regulation (EU) No. 596/2014 on market abuse which is part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR") and is made in accordance with the Company's obligations under article 17 of MAR.  Upon publication of this announcement, this inside information is now considered to be in the public domain. This announcement has been issued by and is the sole responsibility of the Company.

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, or vote in any manner, any securities pursuant to this announcement or otherwise. The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about and observe such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.

Each of Shore Capital and Corporate Limited and Shore Capital Stockbrokers Limited (together, "Shore Capital") are authorised and regulated by the Financial Conduct Authority. Shore Capital and Corporate Limited act as nominated adviser to the Company and Shore Capital Stockbrokers Limited act as broker to the Company. Shore Capital is acting solely for Company in connection with all matters referred to herein and will not be responsible to anyone other than the Company for providing the protections afforded to its customers or for advising any other person in relation to the contents of this announcement or on any transaction or arrangement referred to in this announcement.

The statements contained in this announcement that are not historical facts are "forward-looking" statements.  These forward-looking statements are subject to a number of substantial risks and uncertainties, many of which are beyond the Company's control and actual results and developments may differ materially from those expressed or implied by these statements for a variety of factors.  These forward-looking statements are statements based on the Company's current intentions, beliefs and expectations about among other things, the Company's financial condition, prospects, growth, strategies and the industry in which the Company operates.  Forward-looking statements are typically identified by the use of forward-looking terminology such as "believes", "expects", "may", "will", "could", "should", "intends", "estimates", "plans", "assumes" or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties.  By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future.  In addition, from time to time, the Company or its representatives have made or may make forward-looking statements orally or in writing.  Furthermore, such forward-looking statements may be included in, but are not limited to, press releases or oral statements made by or with the approval of an authorised executive officer of the Company.  No assurance can be given that such future results will be achieved; actual events or results may differ materially from those expressed in or implied by these statements as a result of risks and uncertainties facing the Company and its subsidiaries.  Many of these risks and uncertainties relate to factors that are beyond the Company's ability to control.  Such risks and uncertainties could cause actual results to vary materially from the future results indicated, expressed or implied in such forward-looking statements.  The forward-looking statements contained in this announcement speak only as of the date of this announcement and the Company undertakes no duty to update any of them publicly in light of new information or future events, except to the extent required by applicable law or regulation.

APPENDIX I - EXTRACTS FROM THE DRAFT CIRCULAR TO SHAREHOLDERS

Dear Shareholder,

Proposals for Cancellation of admission of Ordinary Shares to trading on AIM and Members' Voluntary Liquidation of the Company, and equity subscription in Recognise Bank Limited

1.   Introduction

Earlier today, the Company announced that the Directors had concluded that it is in the best interests of the Company and its Shareholders as a whole to:

(i)         cancel the admission of the Ordinary Shares to trading on AIM; and

(ii)         place the Company into a members' voluntary liquidation ("MVL"), pursuant to which it is expected that the Joint Liquidators will carry out a distribution in specie of all the Company's shares in the capital of Recognise Bank Limited ("RBL") to Shareholders on the Distribution Date, in a proportion which is as close as practicable to such Shareholders' pro rata interests in the capital of the Company as at the Record Date.

The Resolutions to approve the Proposals are to be proposed at the General Meeting, which has been convened for 10.00 a.m. on 25 January 2023 at RBL's registered office at Augustine House, 6a Austin Friars, London, England, EC2N 2HA. Notice of the General Meeting is set out at the end of this document.

The purpose of this document is to seek Shareholders' approval for the Resolutions, to provide you with information on the background to and reasons for the Proposals, explain the consequences of the Proposals becoming effective and why the Directors unanimously consider that the Proposals are in the best interests of the Company and its Shareholders as a whole.

The Company has received irrevocable undertakings from certain Shareholders, who, in aggregate, hold 90,017,349 Ordinary Shares, representing slightly above 75 per cent. of the Company's issued share capital, to vote in favour of the Resolutions in respect of all Ordinary Shares held by each of them (or in which they are interested). In view of these irrevocable undertakings, the Directors believe that each of the Resolutions will be passed at the General Meeting. Further details of the irrevocable undertakings received by the Company are set out in paragraph 10 below.

This circular also includes details of a proposed equity fundraising by RBL to raise £25 million at £1.06 per RBL Share, which equates to approximately 30 pence per Ordinary Share,  to meet RBL's capital requirements, for general working capital purposes and to support growth in its loan book. Further details of the proposed equity fundraising are set out in paragraphs 2 and 5 below.

2.   Background to and reasons for the Proposals

Whilst the Company has historically acted as a holding company for a number of operating subsidiaries, RBL is now the only subsidiary owned by the Company and therefore a holding company is no longer required. The Directors have therefore concluded that it is in the best interests of the Company and the Shareholders as a whole to simplify the Group's corporate structure by removing the holding company from the Group structure by seeking cancellation of admission of the Company's shares to trading on AIM and implementing an MVL of the Company. As part of the MVL process, it is anticipated that the Joint Liquidators will carry out a distribution in specie of the Company's shares in RBL (the "RBL Shares") to Shareholders in a proportion which is as close as practicable to such Shareholders' pro rata interests in the capital of the Company as at the Record Date (the "Distribution"). As a result, immediately following the Distribution, Shareholders will become direct shareholders in RBL and will no longer hold any Ordinary Shares.

The Company's only material asset is its interest in RBL and the Company has no material liabilities. The Directors have concluded therefore that it is no longer beneficial for the Company to continue in existence and that it would be preferable for RBL to have a simpler corporate structure without a holding entity whose shares are admitted to trading on AIM. Accordingly, the Directors believe that the Cancellation, the MVL and the Distribution are in the long-term operational interests of Shareholders as a whole, the Group's stakeholders and RBL.

In addition, conditional inter alia upon the Cancellation becoming effective and immediately following the Distribution, PV27, which currently holds 57,125,000 Ordinary Shares, representing approximately 47.83 per cent. of the Company's issued share capital, has agreed to conditionally invest £25 million in RBL at £1.06 per new RBL Share (the "Equity Subscription"), which equates to approximately 30 pence per Ordinary Share. Further details of the Equity Subscription are set out in paragraph 5 below.

Following the Distribution, in order to support liquidity in the RBL Shares for Shareholders who will hold RBL Shares as a result of the Distribution ("RBL Shareholders"), RBL intends to put a matched bargain facility (the "RBL Matched Bargain Facility") in place for a period of time to assist RBL Shareholders who wish to trade in RBL Shares. The RBL Matched Bargain Facility will be provided by Asset Match. Further details of the RBL Matched Bargain Facility are set out in paragraph 6 below.

3.   Cancellation

Reasons for the Cancellation

The Directors have considered the benefits and drawbacks to the Company and Shareholders of retaining the admission of the Company's shares to trading on AIM and believe that the Cancellation is in the best interests of the Company and its Shareholders as a whole. In reaching this conclusion, the Directors have considered the following key factors:

·      it is the Directors' belief that the Group would be able to attain greater access to investment capital privately or off market than is currently available to the Company (given its current scale and stage of development) through the continued admission of the Ordinary Shares to trading on AIM;

·      the considerable cost, management time and the legal and regulatory burden associated with maintaining admission of the Ordinary Shares to trading on AIM is currently, in the Directors' opinion, disproportionate to the benefits to the Group of AIM admission; and

·      there is a limited free float and liquidity in the Ordinary Shares with the consequence that admission of the Ordinary Shares to trading on AIM does not, in the Directors' opinion, offer investors the opportunity, should they wish to, to trade in meaningful volumes, or with any frequency, in an active market.

Following careful consideration, the Directors believe that it is in the best interests of the Company and Shareholders as a whole for the Cancellation to become effective at the earliest practicable opportunity.

Principal effects of the Cancellation

Prior to the Company being dissolved pursuant to the MVL, the principal effects of the Cancellation will be that:

·      Shareholders will no longer be afforded the protections given by the AIM Rules, such as the requirement to be notified of certain events and the requirement that the Company seek shareholder approval for certain corporate actions where applicable, including substantial transactions, financing transactions, reverse takeovers and fundamental changes in the Company's business, related party transactions and certain acquisitions and disposals;

·      the levels of transparency and corporate governance applicable to the Company will not be as high as for a company whose shares are admitted to trading on AIM;

·      following approval of the MVL by Shareholders at the General Meeting, Shareholders will not be able to transfer Ordinary Shares without the prior consent of the Joint Liquidators. In addition there will be no formal market mechanism enabling Shareholders to trade in Ordinary Shares;

·      as a result of the MVL being approved by Shareholders at the General Meeting and in the absence of a formal market in, and quotation of, the Ordinary Shares, it may be more difficult for Shareholders to determine the value of their shareholding in the Company at any given time;

·      the regulatory and financial reporting regime applicable to companies whose shares are admitted to trading on AIM will no longer apply;

·      the Company will cease to have a nominated adviser and broker;

·      whilst the Company's CREST facility will remain in place following the Cancellation becoming effective, the Company's CREST facility may be cancelled in future and, although the Ordinary Shares will remain transferable prior to the approval by Shareholders of the MVL at the General Meeting, they will cease to be transferable through CREST if the CREST facility is cancelled. In this instance, Shareholders who hold Ordinary Shares in CREST would receive definitive share certificates; and

·      the Cancellation may have taxation consequences for Shareholders. Shareholders who are in any doubt about their tax position should consult their own professional independent tax adviser.

Subject to, and prior to the conclusion of the winding-up of, the Company's affairs pursuant to the MVL, the Company will remain incorporated and registered in England and Wales under the Companies Act 1948 to 1976, notwithstanding the Cancellation becoming effective. Shareholders should also note that the Takeover Code will continue to apply to the Company during the period following the Cancellation and prior to the Company being dissolved in connection with the MVL. The Takeover Code will not apply to RBL and accordingly shareholders of RBL will not be afforded the protections of the Takeover Code. The Company will also continue to be bound by the Articles following the Cancellation becoming effective.

The above considerations are not exhaustive and Shareholders should seek their own independent advice when assessing the likely impact of the Cancellation on them.

Following the Cancellation and the MVL, and subsequently the Distribution becoming effective, the RBL Directors intend:

·      to continue to communicate information about RBL (including posting annual accounts) to the shareholders of RBL from time to time, as required by the Act;

·      to continue to hold annual general meetings of RBL;

·      for at least 12 months following the Cancellation becoming effective, to maintain RBL's website and to post updates on the website from time to time. Whilst it is RBL's intention to continue to post updates on the website from time to time, Shareholders should be aware that there will be no obligation on RBL to include all of the information required under AIM Rule 26 and/or to update the website as required by the AIM Rules; and

·      to seek to provide a match bargain trading facility through Asset Match as referred to in paragraph 6 below.

Process for Cancellation

Under the AIM Rules, it is a requirement that the Cancellation must be approved by not less than 75 per cent. of votes cast by Shareholders at a general meeting. Accordingly, the Notice of General Meeting set out at the end of this document contains a special resolution to approve the Cancellation.

Furthermore, Rule 41 of the AIM Rules requires any AIM company that wishes the London Stock Exchange to cancel the admission of its shares to trading on AIM to inform the London Stock Exchange of its preferred cancellation date at least 20 Business Days prior to such date and to notify shareholders. In accordance with AIM Rule 41, the Company (through its nominated adviser, Shore Capital and Corporate Limited) has notified the London Stock Exchange of its intention, subject to the passing of the special resolution numbered 1 in the notice of General Meeting set out at the end of this document to approve the Cancellation at the General Meeting, to cancel admission of the Ordinary Shares to trading on AIM. It is expected that trading in the Company's shares on AIM will be suspended at 7.30 a.m. on the day of the General Meeting, being 25 January 2023, the Joint Liquidators will be appointed immediately following the conclusion of the General Meeting and the Cancellation will become effective at 7.00 a.m. on 26 January 2023, being the Business Day following the General Meeting. If the Cancellation becomes effective, the Company will no longer be required to comply with the AIM Rules and Shore Capital and Corporate Limited will cease to be the Company's nominated adviser and Shore Capital Stockbrokers Limited will cease to be the Company's broker.

4.   Members' Voluntary Liquidation

The Proposals involve the Company being placed into a members' voluntary liquidation. If the MVL and the appointment of the Joint Liquidators are approved by Shareholders at the General Meeting, the Company will be wound-up in accordance with the Insolvency Act. Following their appointment, the Joint Liquidators will assess the Company's financial position and, when they are in a position to do so, it is expected that they will make the distributions in specie detailed in this circular.

Shareholders should note that the Company is solvent and the MVL is not an insolvent liquidation. It is part of a solvent re-organisation of the group structure which is intended to streamline the holding structure and cancel the Company's admission to trading on AIM as referred to above. In the Directors' opinion, the MVL will not have a material adverse impact on the operations of RBL.

In pursuit of this aim, since its shareholding in RBL represents the Company's sole material asset and the Company has no material liabilities, the Directors anticipate that the Joint Liquidators will undertake a distribution in specie of the RBL Shares to Shareholders on the Distribution Date, in a proportion which is as close as practicable to such Shareholders' pro rata interests in the capital of the Company at the Record Date. Following the Distribution, Shareholders will hold shares directly in the capital of RBL, and the Company will effectively become a shell company, allowing for the orderly winding-up of its affairs pursuant to the MVL. Shareholders should also note that the Takeover Code will not apply to RBL following the Distribution taking place.  At the conclusion of the MVL, the Company will be dissolved. Upon the appointment of the Joint Liquidators, which, subject to Shareholders' approval being obtained at the General Meeting, will take effect immediately following the passing of the resolutions approving such appointment at the General Meeting, all powers of the Board will cease and the Joint Liquidators will deal with the affairs of the Company until it is dissolved. The Company confirms that the board of RBL will continue to comprise a majority of independent directors, as required by the PRA and RBL will continue to be authorised by the PRA and regulated by the FCA and the PRA.

The distribution ratio shall be 0.284 RBL Shares for every 1 Ordinary Share held by Shareholders on the Record Date. Fractions of RBL Shares will not be allotted and therefore any distributions will be rounded down to the nearest whole number.

To the extent that any persons currently hold warrants to subscribe for new Ordinary Shares, RBL will issue replacement warrants to such persons entitling them to subscribe for new RBL Shares at an equivalent exercise price. To the extent that any persons currently hold options to subscribe for new Ordinary Shares, such options may either be exercised and/or will lapse upon completion of the MVL. It is intended that a replacement share option plan will be established in due course at the RBL level.

The Board estimates that the costs and expenses of the Proposals will amount to approximately £880,000, which includes the fees of the Joint Liquidators and those of the Company's advisers (inclusive of VAT to the extent applicable). The Joint Liquidators will retain the Liquidation Fund to pay the Company's known and contingent liabilities (inclusive of VAT to the extent applicable), costs of liquidation not already paid at the point of the commencement of the MVL and an amount for unknown contingencies.

Once the Joint Liquidators have made the Distribution, realised the Company's assets, satisfied claims of creditors of the Company and paid the costs and expenses of the MVL, the Joint Liquidators may make a final distribution to Shareholders according to their respective rights and interests in the Company. This final distribution, if any, will not be made until the Joint Liquidators have completed their statutory duty to adjudicate and pay creditors' claims and obtained HMRC clearance confirming the agreement of HMRC to the Company's tax returns and that HMRC has no objection to the closure of the liquidation.

The precise timing of this final distribution (if any) is uncertain and is likely to be of a nominal amount per Ordinary Share, but is be expected to be paid within 12 months of the commencement of the MVL.

The Joint Liquidators will subsequently prepare a final account which will be sent to Shareholders giving eight weeks' notice of the date upon which the Joint Liquidators intend to deliver the final account to the Registrar of Companies. The Company will be dissolved on the expiry of three months following the filing of the final account with the Registrar of Companies.

Shareholders who hold their Ordinary Shares in CREST will receive RBL Shares pursuant to the Distribution through CREST. Shareholders who hold their Ordinary Shares in certificated form will be issued new share certificates relating to the RBL Shares to which they are entitled pursuant to the Distribution. It is expected that such new share certificates will be issued by 2 March 2023.

5.   Equity Subscription

The Company has also announced that it and RBL had entered into a subscription agreement (the "Subscription Agreement") with PV27 pursuant to which PV27 has, among other things, conditionally agreed to subscribe for £25 million of new shares in RBL at an agreed subscription price of £1.06 for each new RBL Share, which equates to approximately 30 pence per Ordinary Share.

The Equity Subscription is conditional, inter alia, on:

(i)         the Company passing resolutions to authorise the allotment of new RBL Shares pursuant to the Equity Subscription;

(ii)         the Distribution having taken place;

(iii)        RBL and PV27 having reached agreement in relation to the proposed board composition of RBL (the board of RBL will continue to comprise a majority of independent directors);

(iv)        RBL and PV27 having reached agreement in relation to the proposed business strategy of RBL to be implemented following completion of the Distribution;

(v)        no changes being made to the composition of RBL's executive management team;

(vi)        the articles of association of RBL not having been cancelled, replaced or superseded;

(vii)       there not having occurred a material adverse change, or any development which would be reasonably likely to result in a material adverse change, in the condition (financial, operational, legal or otherwise) or the earnings, management, business affairs, solvency or prospects of RBL; and

(viii)      there not being any offer or any other proposal to acquire 20 per cent or more of the share capital and/or assets of the Company or RBL.

The Board expects that all of the above conditions will be satisfied by 27 February 2023, following which RBL will publish an announcement through a Regulatory Information Service and on its website confirming that the Equity Subscription has become unconditional.  RBL will use the net proceeds of the Equity Subscription to meet its capital requirements, for general working capital purposes and to support growth in its loan book. The subscription price of £1.06 per RBL Share represents an equivalent price of approximately 30 pence per Ordinary Share (adjusting for the other assets and liabilities of the Company). In addition, PV27 will receive one warrant for each RBL Share that it subscribes for (the "Subscription Warrants"). The Subscription Warrants will be exercisable (in whole or in part) at an exercise price of £1.06 per RBL Share until the Lapse Date and, if not exercised prior to that date, shall lapse.

The new RBL Shares issued pursuant to the Equity Subscription and any new RBL Shares resulting from the exercise of the Subscription Warrants will be credited as fully paid and will rank pari passu in all respects with the existing RBL Shares, including the right to receive all dividends and other distributions declared, made or paid after their date of issue.

PV27 is also in discussions with RBL to underwrite a further subscription for new RBL Shares for an additional £25 million during 2023, subject to certain conditions and operational milestones being achieved by RBL. Further details of any such underwriting will be communicated in due course to Shareholders through a Regulatory Information Service and on RBL's website.

6.   RBL Matched Bargain Facility

As stated above, if the Cancellation is approved by Shareholders, the Company has made arrangements for the RBL Matched Bargain Facility to be put in place to assist RBL Shareholders to trade in the RBL Shares following the Distribution becoming effective. Under the RBL Matched Bargain Facility, Asset Match will operate an electronic off-market dealing facility for the RBL Shares. This facility will allow RBL Shareholders and any new investors to trade in RBL Shares by matching buyers and sellers through periodic auctions.

The Asset Match facility operates under its own code of practice which governs the behaviour of participants and the running of the periodic auctions. Asset Match operates an open auction system where volumes of bids and offers at different prices are displayed on its website together with the closing date of the auction. At the end of each auction period, Asset Match passes this information through a non-discretionary algorithm and determines a "market-derived" share price based on supply and demand and allocates transactions accordingly. Bids and offers may be made and withdrawn at any time before the close date of each auction.

RBL Shareholders will be able to hold their RBL Shares in CREST and should check with their existing stockbroker whether they are willing or able to trade in unquoted shares. RBL Shareholders wishing to trade RBL Shares through Asset Match must do so through a stockbroker. A comprehensive list of stockbrokers who have signed up to access the Asset Match platform is available on request by emailing dealing@assetmatch.com.

Further details of the RBL Matched Bargain Facility will be made available to RBL Shareholders on RBL's website and directly by letter or e-mail (where appropriate). RBL Shareholders may contact Asset Match with any queries regarding trading via the secondary market trading facility by emailing dealing@assetmatch.com. 

In addition to the amount being invested in the Equity Subscription, PV27 has expressed an interest in making available up to a further £300,000 to bid for RBL Shares at the first auction to be held pursuant to the RBL Matched Bargain Facility following the Distribution. The reason for PV27 making available such monies would be to attempt to "tidy up" RBL's shareholder register by seeking to acquire small holdings of shares. Accordingly, the maximum value of any offer to sell RBL Shares to PV27 in that first auction operated pursuant to the RBL Matched Bargain Facility will be £20,000.

7.   Interim Results

Earlier today, the Company announced its unaudited interim results for the six months ended 30 September 2022 ("Interim Results") which are available on the News & Investors page of its website www.cityoflondongroup.com.   The Group made a loss before tax of £7.2 million (30 September 2021: loss before tax of £5.8 million ) in line with the Board's expectations.  Deposits increased from £95.0 million to £127.9 million (30 September 2021: £8.7 million) over the 6-month period, reflecting the successful launch of business savings products which contributed £46 million of deposits at 30 September 2022, while the loan book grew from £101.1 million to £112.1 million (30 September 2021: £24.1 million). Having achieved its target of lending £100 million to British businesses by 31 March 2022, just six months after receiving its full banking licence, the pace of lending was moderated deliberately as RBL focused its resources on building its technology capabilities and launching new savings products during the period.   RBL has reviewed its lending product mix and risk appetite against the backdrop of a challenging economy, as it prepares for the next phase of RBL's development and its return to full lending capacity.

8.   Current Trading and Outlook

The Interim Results include my comments as follows:

"After a milestone year that saw Recognise Bank achieve fully licensed status, the last six months have continued to be busy. We continue to build our strategy for the next phase of Recognise Bank's development, focusing in particular on the digital journey to help improve our processes and delivery of product to customers. The SME sector is still woefully under-supported by the established banks, so the opportunity for fresh ideas and innovation is huge. We look forward to the proposals which have been separately announced today being implemented, including the investment by PV27 of £25 million in new shares in Recognise Bank. This latest investment of £25 million will be used to fund working capital, the further development of innovations and improvements to existing services, at the same time supporting the growth of our commercial lending book. This new investment demonstrates the confidence of our major shareholder in the Bank's strategy and potential, and our vision for business banking in the UK. While we do not underestimate the ongoing challenges that SMEs and their customers face from the current economic conditions, the Board believes Recognise Bank is in a good position to capitalise on the opportunities we foresee. The loan book is strong because of prudent credit management, we are well capitalised, and with our innovation team we are already looking to develop the financial solutions SMEs will need in the future."

9.   General Meeting

Set out at the end of this document is a notice convening the General Meeting to be held at 10.00 a.m. on 25 January 2023 at RBL's registered office at Augustine House, 6a Austin Friars, London, England, EC2N 2HA at which the Resolutions will be proposed.

The Resolutions are inter-conditional so that passing of each of the Resolutions is conditional on the passing of each of the other Resolutions.

10.  Irrevocable Undertakings

The Company has received irrevocable undertakings from certain Shareholders in respect of, in aggregate, 90,017,349 Ordinary Shares, representing slightly above 75 per cent. of the Company's issued share capital to vote or procure votes in favour of each of the Resolutions, in respect of all Ordinary Shares held by each of them (or in which they are interested). Details of these Shareholders and the number of Ordinary Shares held by them are as follows:

Accordingly, as set out above, the Directors believe that each of the Resolutions will be passed at the General Meeting.

11.  Related Party Transactions

RBL and PV27 entered into a relationship agreement on 23 August 2021 (the "Relationship Agreement") which was amended and restated pursuant to an amendment and restatement agreement entered into between RBL and PV27 on 17 May 2022, and RBL and PV27 entered into a further deed of variation on 22 December 2022 to vary the terms of the Relationship Agreement to reflect, among other things, the Cancellation (the "Deed of Variation"). The Deed of Variation is conditional on, inter alia, the Cancellation becoming effective and the Equity Subscription having been completed.  In addition, the Company, RBL and PV27 have entered into the Subscription Agreement in relation to the Equity Subscription, further details of which are set out in paragraph 5 above.

The entry into each of the Deed of Variation and the Subscription Agreement constitutes a related party transaction for the purposes of Rule 13 of the AIM Rules for Companies. The Independent Directors (being the Directors other than Nyreen Llamas and Ruth Parasol) consider, having consulted with the Company's nominated adviser, Shore Capital and Corporate Limited, that the terms of each of the Deed of Variation and the Subscription Agreement are fair and reasonable insofar as Shareholders are concerned.

12.  Action to be taken

You will find enclosed with this document a Form of Proxy for use at the General Meeting. Whether or not you propose to attend the General Meeting in person, you are requested to complete and return the Form of Proxy to the Registrar, in accordance with the instructions printed thereon as soon as possible but, in any event, so as to be received by no later than 10.00 a.m. on 23 January 2023. Completion and return of a Form of Proxy will not preclude you from attending and voting at the General Meeting in person if you so wish.

13.  Recommendation

The Directors consider that the Proposals are in the best interests of the Company and its Shareholders as a whole and therefore unanimously recommend that you vote in favour of the Resolutions. Philip Jenks and Richard Gabbertas, as independent Directors who are interested in Ordinary Shares, have undertaken to vote, or procure the vote, in favour of the Resolutions in respect of, in aggregate, 57,000 Ordinary Shares, representing approximately 0.06 per cent. of the Company's issued share capital, to which they are beneficially entitled. In addition, PV27 (in which Ruth Parasol and Nyreen Llamas are interested) and Paul Milner have undertaken to vote, or procure the vote, in favour of the Resolutions in respect of, in aggregate, 57,231,238 Ordinary Shares, representing approximately 47.9 per cent. of the Company's issued share capital, to which they are beneficially entitled.

Philip Jenks

Independent Non-executive Chair