Atom Bank gets £30 million from British Business Bank

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.

“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.”
— Atom’s founder and chairman Anthony Thomson

The investment by the BBB comes a day after Chancellor Philip Hammond 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.

“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. 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.”
— Hammond

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.

“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.”
— Catherine Lewis La Torre, CEO of British Business Bank Investments

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

Source: Business Insider UK


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