Lloyds Shares Jump as High Street Bank Eyes Aldermore Takeover

Lloyds Banking Group (LON: LLOY) shares climbed on Monday as reports emerged that Britain’s biggest high street bank is exploring a potential takeover of SME lender Aldermore.

The stock climbed 3.9% to 109.2p — touching the session high — on heavy volume of over 193 million shares traded on the London Stock Exchange.

According to Sky News, Lloyds has begun preparations for a possible bid for Aldermore, the South African-owned bank that is currently on the market.

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City sources cited by Sky News said Lloyds is examining Aldermore specifically for its small business lending and project finance capabilities, though cautioned that a formal bid is by no means certain.

Aldermore is being sold by its parent company, FirstRand, which has grown frustrated with the Financial Conduct Authority’s proposals for a £9.1 billion redress scheme targeting motor finance mis-selling.

Aldermore has already set aside £750 million to compensate affected motorists. Sky News reports that any prospective buyer is expected to demand an indemnity against further compensation liabilities, given the ongoing uncertainty around the timing and scope of the FCA’s redress programme.

Lloyds is not the only suitor circling the lender. Sky News also revealed that challenger bank Shawbrook Group — which floated in London last year — is examining a potential combination with Aldermore, a deal that could kickstart another wave of consolidation among UK challenger banks.

Several private equity firms are also said to be preparing to request information once a formal auction begins.