A BANK which Warrington Borough Council has invested almost £30 million in made a pre-tax loss of £3.8 million in 2018.

In January 2017, the council controversially agreed to pay £30 million to buy a 33 per cent share in Redwood Bank.

Earlier this year, it made its third payment to bring its investment to just under the agreed amount.

In Redwood Bank’s latest accounts, it confirms the bank made a £3.8 million loss, before tax, for the year ending December 31 2018.

The accounts say the directors have a ‘reasonable expectation’ that the bank has adequate resources to continue in operational existence for the ‘foreseeable future’.

The council has borrowed the cash which it has invested.

But the yearly borrowing costs are costing it £1.3 million a year – and it does not expect to get any financial returns until year five.

And following confirmation that the bank recorded a £3.8 million pre-tax loss last year, the council insists it ‘does not have any current concerns’.

A spokesman added: “The bank is performing to its business plan. If the bank continues to perform as we expect it will do, the forecast financial returns will be achieved.

“The bank is outperforming its business plan with regards to the large volume of loans granted in Warrington and the north west region.”

However, retired accountant Richard Buttrey has cast doubt on the council’s stake in the bank.

He says: “Warrington Borough Council’s £30 million bank investment is for a 33 per cent shareholding in a company called Redwood Financial Partners Ltd, that does not have a banking licence.

“Redwood Financial Partners Ltd have in turn used the council’s funding to take a 90 per cent shareholding investment in a bank called Redwood Bank Ltd. The other 10 per cent is owned by a director of the bank and five others.

“Hence, the council’s effective shareholding in Redwood Bank (for which they have contributed nearly 90 per cent of the capital) Ltd is just 29.7 per cent (33 per cent of 90 per cent), not the 33 per cent that is always mentioned.

“In addition, the shareholders agreement permits the issue of bonus shares by directors to directors.

“Whenever these bonus shares are issued this will have the effect of diluting the council’s 29.7 per cent shareholding in the bank even further.”

In response, the council spokesman said: “The council has invested just under £30 million and is a 33 per cent shareholder in Redwood.”