FirstRand confirms interest in UK bank

print

FirstRand confirms interest in UK bank

Published Date: 2017-10-17 | Source: Stephen Gunnion | Author: Stephen Gunnion | Comments

FirstRand confirms interest in UK bank

The weak pound has made British companies cheaper for foreign suitors

FirstRand plans to bulk up its UK business with the purchase of so-called "challenger" bank Aldermore Group in a deal worth close to R20 billion.

It said it would use the purchase to help build a sustainable long-term deposit franchise base to fund its strategy to grow and diversify the revenues of its current UK business. It said the possible acquisition of Aldermore would provide the ideal platform for FirstRand to fulfil this strategy on an accelerated basis due to its unique operating model, market positioning and strength in deposit taking. It already owns UK vehicle financing business MotoNovo.

According to Reuters, the UK's challenger banks emerged after the global financial crisis to fill a gap in small business lending and capitalise on problems at the larger banks, like Royal Bank of Scotland and Lloyds. However, the weak UK economy and a prolonged period of low interest rates have dented earnings, making them vulnerable to takeovers. The weak pound has also made British companies cheaper for foreign suitors.

FirstRand deal said the offer is subject to a due diligence of Aldermore and there can be no certainty that it will make a firm offer.

Its shares eased back 0.1% yesterday to end trade at R53.31.



Similar Stories