Lloyds Banking Group is reportedly considering a takeover of Aldermore, the UK banking unit owned by South Africa’s FirstRand. This follows FirstRand’s April announcement that it plans to exit the investment.
The divestment is driven by a costly redress scheme for mis-sold motor finance in the UK. FirstRand has significantly increased its financial provisions to cover these potential liabilities.
Shawbrook is also evaluating a potential bid for the lender. Any buyer will likely seek indemnity against further compensation costs, given the regulatory uncertainty surrounding the Financial Conduct Authority’s ongoing redress program.