Digital Lender Atom Taps Investors For £75m

The UK's first digital-only bank is tapping investors for £75m in fresh funding as it inches towards a green light from regulators that will enable it to open for business within months.

Sky News understands that Atom Bank, which is being set up by the former chairman of Metro Bank, has drafted in bankers from Canaccord Genuity (Other OTC: CCORF - news) to raise the new capital from existing and new investors.

The fundraising will take to approximately £100m the total sum raised by Atom Bank, which is targeting a launch later this year.

Its founders, Anthony Thomson and Mark Mullen, who previously ran First Direct, the highly-regarded lender owned by HSBC, believe there is a significant opportunity for a service-led bank with few of the overheads associated with high street branch networks.

A roadshow of prospective investors has been scheduled for this month, City sources said on Wednesday.

Atom's management is keen to target local businesspeople in cities such as Bristol, Leeds and Manchester as small shareholders, hoping that doing so will offer a natural platform to build its business banking services.

The company has already attracted a list of blue-chip shareholders, most notably including Jim O'Neill, the former Goldman Sachs (NYSE: GS-PB - news) chief economist, and Neil Woodford, the prominent fund manager who had indicated his antipathy to bank shares because of the ongoing compensation and legal costs related to past misconduct.

Sources said that Atom Bank, which is based in the North East, hopes to receive regulatory approval from the banking and City watchdogs during the summer.

Paul Pindar, a former chief executive of the outsourcing group Capita (LSE: CPI.L - news) , and Jeremy Middleton, the Newcastle-based co-founder of Homeserve (Other OTC: HMSVF - news) , are also among Atom's shareholder base.

Mr Thomson, who spearheaded Metro Bank's launch as the first new high street lender in more than a century, believes Atom will be well-placed to exploit the fast-growing demand for digital banking.

Lenders such as Lloyds Banking Group and Barclays (LSE: BARC.L - news) are closing hundreds of branches, citing data from the British Bankers' Association which highlights, for example, a doubling of mobile banking app usage from 9.1m a week in 2012 to 18.6m the following year.

Atom has also a string of well-connected board members, although Lord McFall, the former chairman of the Treasury Select Committee, has in recent weeks opted to relinquish his role with the bank in order to take up a role on the new Banking Standards Board.

Atom could not be reached for comment on Wednesday.