Lloyds Banking Group is reportedly considering a takeover bid for Aldermore, the UK subsidiary of South Africa’s FirstRand. Shawbrook is also cited as a potential suitor for the specialist lender.
FirstRand announced its intention to divest from Aldermore in April. The decision follows the financial impact of a UK regulatory scheme designed to compensate consumers for mis-sold motor finance.
FirstRand has significantly increased its financial provisions to cover these redress costs. Any potential deal will likely require an indemnity clause to protect the buyer from future motor finance liabilities.
A successful transaction would fundamentally alter FirstRand’s capital allocation strategy and its presence in the UK market.