Enba set to raise €30m to prop up e-bank

Senior directors of Dublin-based Internet holding company Enba will meet later today in London and are expected to sign off on a funding round worth up to €30 million (£38 million).

The company is raising money to keep its Internet banking subsidiary, First-e, afloat until a proposed merger with the Spanish Internet bank Uno-e is completed.

The merger with Uno-e, a subsidiary of the Banco Bilbao Vizcaya Argentaria Group, was scheduled to be completed by the first week of March.

But it now seems unlikely the merger, first unveiled in March last year, will be completed on schedule as Spanish regulators continue to investigate the €2.4 billion (£1.89 billion) transaction.

With no sign of the deal with Uno-e being finalised, it is believed Enba has raised up to €30 million from existing investors, including the US venture capital firm, Capital-Z.

A source close to the situation said last night the board would probably sign off on the funding at a board meeting later today.

First-e, which operates under the licence of Banque d'Es compte of France, provides Internet banking services to customers in the UK and Germany.

It has been funded with some €100 million in equity capital raised by Enba and a commercially based credit line estimated at €100 million by BBVA until now.

The downturn in sentiment towards the Internet sector and a growing scepticism of Internet banking recently caused First-e and Enba to claw back their aggressive expansion plans.

First-e shed 70 staff at its Dublin office a few months ago and Enba is believed to be seeking an equity partner to help fund factor-e, a technology firm which provides financial services software to banks.

Industry sources said yesterday if the money was secured it would give First-e some breathing space in case the merger with Uno-e was delayed further or did not go through.

Speculation that management at Uno-e bank is considering using the regulatory delay to back out of the merger with First-e was dismissed yesterday by a Uno-e spokesman.

"We are working towards completion of the deal but it may take longer than originally expected to go through," said the spokesman.

It is unclear how many of the original investors in Enba will invest in the new funding round. But it is understood Intel Capital will not participate.

An Enba spokesman would not comment on "any rumours that may be in circulation".