Metro Bank has reportedly begun assessing a possible offer for UK challenger bank Aldermore, which is being sold by its South African parent, FirstRand.
The UK-based lender is at an early stage of evaluating whether to submit a formal bid for Aldermore, a specialist in mortgages and business lending, according to a report by Sky News. Metro Bank is understood to be one of several parties examining the opportunity, and it has not yet decided whether to proceed with a formal offer.
Background to the sale
FirstRand announced in April 2026 that it was putting Aldermore up for sale, after estimating that the motor finance mis-selling scandal would cost the business around GBP 750 million in compensation payouts. FirstRand acquired Aldermore in 2017 for GBP 1.1 billion. Lloyds Banking Group, the UK's largest retail bank by customer numbers, has also been named as a party involved in the sale process, alongside Shawbrook Group and other UK banks that may submit offers.
The compensation costs stem from the motor finance mis-selling issue, which has also drawn in the finance arms of other lenders, including BMW and Volkswagen. The Financial Conduct Authority has established a redress scheme valued at GBP 9.1 billion to address the fallout, though the scheme has faced a number of legal challenges. Nikhil Rathi, the FCA's chief executive, has criticised opponents of the programme and claims management firms over their conduct in relation to the scheme.
Metro Bank's recovery
Metro Bank's interest in Aldermore comes three years after the lender required a rescue following a near-collapse in 2023. The bank was recapitalised through a GBP 325 million fundraising led by Jaime Gilinski, a Colombian investor who holds just over 50% of Metro Bank. Reports in 2025 indicated Gilinski could be open to selling his stake.
Metro Bank currently has a market valuation of approximately GBP 1.1 billion, with its share price having risen by around a third over the past year. Daniel Frumkin, the bank's chief executive, has been credited by investors with refocusing the business towards more profitable lending activities and reducing costs.
A key consideration for Metro Bank would be how to fund any offer for Aldermore. Options reportedly include raising new equity or structuring part of the consideration in shares, although FirstRand is understood to be reluctant to accept a share-based transaction. In addition, banking sources have also indicated that any prospective buyer of Aldermore would likely require an indemnity covering potential further compensation liabilities linked to the motor finance issue.
Metro Bank has not commented publicly on the matter.
The potential transaction would mark further consolidation among UK challenger and specialist lenders, several of which have faced increased scrutiny and cost pressures linked to conduct-related liabilities in the motor finance sector.
