Challenger bank Aldermore on the lookout for M&A as rumours of industry consolidation swirl (but it's not interested in Co-op Bank)

William Turvill
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Phillip Monk is chief executive of Aldermore (Source: Aldermore)

Challenger bank Aldermore is on the lookout for deals as rumours of consolidation within its peer-group swirl.

The bank’s chief executive, Phillip Monks, told City A.M. he believes there “will be opportunities” for mergers and acquisitions (M&A) activity in the coming months.

However, he said his bank was never interested in the sale process around Co-op Bank, which fellow challengers Virgin Money and CYBG were linked with.

Read more: Brexit schmexit: Aldermore reports profit boost despite EU vote uncertainty

“We’ve got a really strong organic growth engine here and we can achieve all our plans organically,” Monks said. “But I think there will be opportunities coming up over the next year, and I think they’ll be in the form of, potentially, portfolios, which will be accretive to shareholder returns, or [joint ventures] that we might want to embark on for various reasons. Or indeed there may just be hard M&A.”

He added: “And there is a lot of talk… Not all of it makes a lot of sense, but what we’ve said is it would be wrong for us to be dogmatic, so we’ll just be on our toes. We cast a look around the market, and if there’s something we can see that would be generative to shareholder returns then we’ll take a look at it.”

On Co-op Bank, Monks said: “I just don’t think it’s the right sort of bank for us, to tell you the truth. We’ve got plenty of opportunity to grow within our own skin as a specialist lender: we don’t have any branches, we don’t have any legacy, we’re a very modern, digital environment here and we’re very happy with that.”

Read more: Thanks Carney: Aldermore's results boosted by Bank of England scheme

Aldermore today reported a “great quarter” of results, with loans up six per cent to £7.9bn in the first three months of the year. However, its share price was down 1.5 per cent to 253p at the time of writing.

Monks noted that challenger banks’ shares were “very badly belted” by the Brexit vote but that Aldermore has “performed very, very strongly” since then. Since 6 July last year, when Aldermore’s shares dropped to 105p, its price is up more than 140 per cent.

He added: “I feel that, more and more now, the UK homeowner and the UK SME recognises the value of the expertise and the dynamism that the challenger bank – well, I speak for Aldermore – can bring to the marketplace. And therefore they have no fear whatsoever in seeking that out.”

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