Atom Bank gets £30 million from British Business Bank

Atom Bank Anthony Thompson and Mark Mullen
Atom Bank chairman Anthony
Thomson, left, and CEO Mark Mullen.


LONDON — Startup bank Atom has received a £30 million funding
boost from the state-owned British Business Bank (BBB).

British Business Bank Investments, the commercial arm of the BBB,
announced it has agreed a £30 million Tier 2 capital facility
with Atom, a digital-only bank founded in 2014. The facility,
effectively a loan to Atom, will allow the Durham-based bank to
lend out more money to small businesses.

Banks are required to maintain a certain amount of capital to
secure their lending and other assets. This capital is given
different classifications, based on how easily it can be
liquidated and how reliably it can be priced. Tier 2 Capital, as
you’d expect from the name, sits below Tier 1 Capital in the
pecking order.

Atom’s founder and chairman Anthony Thomson says in a statement:
“Access to Tier 2 capital at such an early stage of the growth
cycle is rare and we are extremely pleased to be gaining this
support from British Business Bank Investments.

“This facility provides us with tremendous flexibility. Like all
banks, we are actively managing our capital structure and having
access to Tier 2 capital at this stage helps support our growth
and is a great result for Atom, its shareholders and customers.”

The investment by the BBB comes a day after Chancellor Philip
reiterated the government’s promise to meet any investment
shortfall in businesses left by Brexit.
The European
Investment Bank invested €6.9 billion into UK businesses last
year but could stop funding British businesses while Brexit talks
are ongoing.

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said in his Mansion House speech on Tuesday:
“The European
Investment Bank, and its offshoot, the European Investment Fund,
have been an important source of funding for infrastructure
investment and for growth businesses.

Philip Hammond
Chancellor of the Exchequer, Philip Hammond, delivers a speech to
the Bankers and Merchants at The Mansion House in London, Britain
June 20, 2017.


“I want that access to EIB funding to continue while we are
members of the EU on equal terms so I am engaged with EIB and
will provide the assurances it needs to sustain the flow of EIB
and EIF funding to UK businesses and projects.

“And to ensure that finance continues to be available after
Brexit, alongside these discussions with the EIB I can also
announce I am expanding the support available to capital funding
in the UK.”

Part of the expansion involves raising the amount the BBB can
invest in venture capital funds to 50% of its funds, although
this expansion does not cover the Atom deal.

The British Business Bank was set up by the government in 2012
with £1 billion of funding to increase funding to small and
medium enterprises (SMEs). It does not finance SMEs directly but
works through partners and intermediaries to extend funding.

Catherine Lewis La Torre, CEO of British Business Bank
Investments, says: “Our investment in Atom Bank demonstrates our
commitment to increasing the diversity of small business finance
by supporting recently licensed and ambitious challenger banks.

“We have seen challenger banks becoming an increasingly important
source of UK SME funding and we believe a committed regulatory
capital facility will not only support Atom’s growth trajectory
but will also drive the bank’s ability to lend to UK SMEs.”

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Atom Bank was founded by Thomson, who previously cofounded Metro
Bank, and Mark Mullen, the former CEO of First Direct.