Aldermore owner mulls splitting group as Investec circles banking unit

Aldermore's owner is considering splitting the group following a flurry of bids, with the bank's motor finance division excluded from the interest. South African lender Firstrand initiated the sale process in April, attracting initial bids from approximately a dozen parties, according to sources. The competition has narrowed down to a few potential buyers, including Lloyds, Investec, and a consortium involving Warburg and Cerberus private equity firms.

However, Investec, a UK and South Africa-based dual-headquartered institution, is the leading contender, with a particular interest in acquiring the banking unit while steering clear of Motonovo, Aldermore's loss-making motor finance lender. RBC analysts anticipate the entire Aldermore group to be valued between £1.1bn and £1.6bn.

Despite other parties like Nationwide, Metro Bank, and CVC exploring various deals, the motor finance unit's inclusion in the sale process has caused friction. Motonovo acknowledged a £153.2m charge in its latest accounts, related to historical motor finance commissions, which significantly exceeded the £60.6m recorded in the preceding year.

This substantial provision, driven by pressures from a regulatory redress scheme, resulted in a £151.6m loss for the financial year ending June 2026, a staggering six-fold increase from the previous year's £24.6m loss. Firstrand announced its intent to sell Aldermore, expressing frustration with the Financial Conduct Authority's car finance compensation scheme, which was established following years of legal disputes in the sector and a partial overturning of a landmark ruling by the UK Supreme Court.

The court partially invalidated a critical ruling on car finance deals, acknowledging certain undisclosed commissions as unfair, but left the door open for potential industry-wide compensation. Recent reports suggest Aldermore is also contemplating significant job cuts due to plans to reduce its invoice finance business. When approached for comment, Lloyds, Aldermore, Warburg, and Investec declined to provide any additional information.