Atom Bank has no physical branches. Credit: Philip Veater on Unsplash.

British digital lender Atom Bank is scouting for investment banks for its initial public offerings after shelving its merger deal, Sky News has reported citing sources.

The lender is in interviewing banks for the IPO, which is likely to happen in London in 2023.

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According to sources, Atom Bank could appoint lenders in the coming weeks but the final decision on the list will depend on market conditions.

The news underscores that the Atom Bank has given up in its plans to go public in the US via a £700m merger with a special purpose acquisition company (SPAC) formed by Wilbur Ross, who served as the commerce secretary in the US administration between 2017 and 2021.

As per the publication’s earlier report, the lender hoped to merge with Ross Acquisition Corp II and raise around £150m in PIPE (private investment in public equity) investment.

Founded in 2014, Atom Bank is said to have more than £2.5bn in customer deposits and completed mortgages of over £3bn.

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The lender, which has no physical branches and offers services through app, has raised some £500m in equity from investors in total.

It counts Spanish lender BBVA, Toscafund, Infinity Investment Partners and Woodford Investment Management, which is now dissolved, as its backers.

In February this year, the bank raised more than £75m and at the time its CEO Mark Mullen said: “This capital will allow Atom to build on the progress we have made, and to keep offering real competition for people who want to own their own home, grow their own businesses and – at a time of rapidly rising costs – save for the future.

“It is also a fundamental next step on our journey toward IPO.”