Shawbrook weighs Aldermore bid as Firstrand looks to offload challenger bank
Shawbrook is reportedly weighing up a merger with rival Aldermore after its owner put the challenger bank up for sale.
The lender, which debuted on the London Stock Exchange last year, is in the early stages of considering a takeover, according to Sky News’ Mark Kleinman.
South Africa-based financial services group Firstrand, which bought Aldermore for £1.1bn in 2017, took the decision last month to put the British bank up for sale after it was forced to set aside £750m in connection with the UK’s motor finance redress scheme.
The £9bn scheme devised by the Financial Conduct Authority (FCA), set to award compensation to motorists who were missold car finance, was branded “disproportionate and unfair” by Firstrand, which moved to offload Aldermore because it was “cognisant of protecting shareholder value and ensuring Aldermore’s future success.”
Shawbrook, which has seen its shares slide since its October London IPO, would likely rely on external finance to fund any deal, which could also be blocked if major shareholders are unimpressed with the terms of any merger.
Shawbrook declined to comment.
Consolidation under way among challenger banks
Reports of a deal come amid growing expectations of increasing consolidation among the UK’s top challenger banks and fintechs.
Last year, Lloyds bank bought payments business Curve while fintech Railsr merged with Equals Money. In 2024, challenger bank Monese was snapped up by fintech Pockit. Starling bank has also reportedly considered a merger with Shawbrook.
“I do expect that some of the bigger banks will buy parts of capabilities or parts of businesses they don’t have,” said Zopa bank chief executive Jaidev Janardana.
“I do believe that there might be more consolidation within the fintechs themselves, where a lot of us have built complementary capabilities and there might be an opportunity for us to come together.”