By Mark Kleinman, City Editor
An electronic invoicing group headed by a prominent City financier will on Monday announce that it is to start taking deposits as it aims to become a leading challenger bank for corporate clients.
Sky News understands that Tungsten Corporation, which is headed by Edi Truell, the former chief executive of private equity group Duke Street Capital, will say that it is to offer annual interest of 1.5% on 35-day sterling deposits, rising to 1.8% for funds left with its Tungsten Bank arm for a year.
The deposit base will be used by Tungsten Bank to provide additional invoice financing as Mr Truell seeks to build the group into a business capable of processing as much as $1trn of invoices each year.
Invoice financing enables companies to maximise their cashflow by taking discounted early payment, an issue which has acquired significant political resonance amid a string of controversial announcements by blue-chip corporate names about the extension of supplier payment terms.
The benefit to big users of such services - Tungsten's clients include Aviva, Apple, GlaxoSmithKline and Nestle - is the potential for vast procurement cost-savings.
Tungsten Network says its customers include well over half of Fortune 500 companies, in addition to UK and US government bodies.
Mr Truell, who floated Tungsten on London's junior AIM stock market two years ago, believes the market is among several areas of the financial services industry which are ripe for a fresh approach.
He has said previously that Tungsten wants to disrupt financial markets which neglect the needs of businesses.
Last week, the group announced that it had secured a deal with the asset management giant Insight Investment Management to help finance the business.
A number of other so-called challenger banks are attempting to impose their own version of disruption on the provision of services to small and medium-sized companies (SMEs).
Shawbrook Bank, whose board members include the former Royal Bank of Scotland chief Sir George Mathewson, is close to confirming plans for a public flotation.
The launch of its deposit-taking operations comes after a difficult few weeks for Tungsten, which has seen its share price fall sharply and an increase in short-selling activity in the company's stock.
Mr Truell, nevertheless, has major ambitions for Tungsten, recently telling The Times: "We'd like to process $1 trillion worth of invoices a year. We'd like to provide finance of $100bn a year. And we'd like to save our clients $10bn a year."
A new wave of banks has been launched following a concerted push prompted by ministers to lower barriers for entry amid continued complaints about the treatment of SMEs by the largest high street lenders.
Tungsten declined to comment ahead of Monday's announcement.
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