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Leading City Hedge Fund Buys Atom Bank Stake

Leading City Hedge Fund Buys Atom Bank Stake

One of London's top hedge funds is to buy a stake in Britain's first app-based lender just weeks after George Osborne hit challenger banks with a tax bombshell.

Sky News has learnt that Marathon Asset Management is subscribing to part of a £25m share issue in Atom Bank which will be raised in the coming days.

It will be the first shareholding that Marathon, which manages billions of pounds of investors' money, has acquired in Atom, according to people close to the situation.

A number of the yet-to-launch bank's existing investors, including Woodford Investment Management, Polar Capital and Toscafund, will also participate in the fundraising.

Atom is closing in on a launch after it secured a licence from regulators earlier 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.

The company has already attracted a list of blue-chip shareholders, most notably including Jim O'Neill, the former Goldman Sachs 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.

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 are closing hundreds of branches, citing data from the British Bankers' Association which highlights 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, including Laurel Powers-Freeling, a former boss of Marks & Spencer's financial services arm.

However, many challenger banks have reacted furiously to the Treasury's decision to impose a corporation tax surcharge from next year, which will yield an additional 8% of lenders' profits above a £25m threshold.

Some banks have called for that threshold to be raised substantially, warning that the Chancellor risks stunting the growth of new lenders in an industry which he has complained desperately lacks competition.

Atom was unavailable for comment on Thursday.