Harrods Bank will be purchased by banking startup Tandem subject to regulatory approval.
As part of the deal Harrods will receive a capital injection of £80m and operate under the Tandem brand.
After the purchase Tandem will be managing a loan book of nearly £200m.
Harrods Bank made more than £13m of losses in the past two financial years.
Ricky Knox, founder of Tandem, said: “Tandem has been built from the ground-up with the help of over 11,000 co-founders, who have helped us shape products and services that really make a difference to their lives.
“This acquisition will allow us to scale the business and ensure we can introduce as many people as possible to a new way of banking.”