CONCERNS have been raised over the ‘disappointing’ value of Warrington Borough Council’s share in a bank which it has invested in.

As reported earlier this month, the latest accounts of Redwood Bank Limited, published for the year ending December 31, 2020, reveal continued losses at the bank.

Redwood Bank has posted a pre-tax loss, for the year ending December 31, 2020, of £1.7 million – which is an increase of half a million pounds over the losses posted in the previous year.

Chris Haggett, a retired chartered public finance accountant, said: “As well as the £1.7 million loss mentioned previously, we now know the value of the bank to its owners as at the end of year 2020.

“In total this was £27.6 million, making Warrington Council’s one-third share – for which it had paid £30 million – worth £9.2 million, which is just £0.5 million more than it had been worth 12 months previously.

“There can be no doubt that these are disappointing figures but the directors’ report emphasises the significant impact of Covid-19 on the bank’s operations during the year.

“The increased loss, they state, is largely due to the higher ‘impairment charge’ they had to provide to cover the increased risk of default by customers whose businesses were affected by lockdown.

“This issue is also alluded to by the bank’s auditor. He refers in his report to the risk of fraud (related to impairment of loans to customers) in response to management override of controls, though he does not say there has necessarily been any fraud.

“These Covid-19 related issues will presumably have continued into the first part of 2021, thereby further delaying any recovery of the Redwood investment.

“We must also remember that the council is incurring costs – interest charges on the £30 million it has borrowed, plus professional fees (external advice, solicitor, auditor etc) – averaging together about £1 million pa – which will also need to be recouped in the overall assessment.”

The Labour-run council has now invested £32 million into the bank after putting in a further £2 million earlier this year.

The council has pointed to its comment earlier this month and said it has no further comment to make.

A spokesman said: “We continue to be pleased with our investment in Redwood Bank.

“It was never solely about driving income but about providing a lever to support regional SMEs.

“Furthermore, given the turbulence caused by the pandemic, the bank is in a comparably strong position and continues to perform in line with the original business plan agreed in 2017.”