The valuation of one of Britain’s most prominent digital banks is about to halve, underlining the challenges facing new lenders in an era of ultra-low interest rates.
Sky News has learnt that Atom Bank, which launched in 2016, is close to concluding a fundraising at 60p-a-share, just under half the price at which it raised equity in 2019.
Sources close to the situation said the capital injection was expected to be completed in the coming weeks.
One Atom Bank insider insisted that shareholders had yet to approve the 60p price.
In an announcement about the £40m fundraising issued last month, Atom Bank made no reference to the company's sharply reduced valuation.
If the deal goes through, it is expected to further concentrate the neo-bank's ownership in the hands of just two shareholders: BBVA, which owns just 40%, and Toscafund, which is likely to see its stake rise from 29% to 33%.
One of the reasons for the prospective price of the share sale is that another of Atom Bank's biggest shareholders - a fund managed by Schroders which was previously part of the controversial fund manager Neil Woodford - is unable to participate.
That will lead to the Schroders fund's 15% stake being diluted, enabling Toscafund to increase its stake, according to an executive close to the bank.
Atom Bank has raised £450m from the sale of shares during the six years since it secured its banking licence, while it has also completed several securitisations of residential mortgage-backed securities.
Mark Mullen, its chief executive, recently hailed a record year for the business, and said it was targeting a stock market listing in 2022-23.
It said it had tripled its business lending in the last 12 months, partly because of its participation in the Coronavirus Business Interruption Loan Scheme.
Mr Mullen, who declined to comment on the halving of Atom Bank's valuation, said last month: "We have been there for new and existing customers during the pandemic, and in a year when we have held our operating costs constant I'm delighted that we have coupled substantial income growth with an enviable record of customer experience.
"We turn to our shareholders for capital as and when we need it to drive growth.
"Despite it being a difficult environment for all companies that need to raise funding, this capital-raise will allow us to continue to progress towards profitability and ever-improving levels of efficiency and engagement."