Aldermore linked with latest takeover approach for Co-op Bank

Fresh takeover speculation regarding Manchester-based Co-op Bank has emerged, with Aldermore Group the latest in the frame.

The mid-sized consumer and business lender has hired advisers to work on a takeover bid, according to Sky News.

It follows Co-op Bank’s cool reaction to claims last month that Shawbrook had mooted a £3.5bn merger between the two banks. A Co-op spokesman dismissed the reports as “media speculation” and declined to comment further.

The latest developments claim that Aldermore, part of South Africa’s FirstRand Group, is working with investment bankers on BNP Paribas on the size and structure of an offer for Co-op Bank.

The Manchester-based bank, which is owned by US hedge funds, has set a deadline for potential bids by early next month.

Its recent history has seen the bank narrowly avoid collapse on two occasions.

In 2013, a bid to acquire the branch network which became TSB collapsed when the Co-op Bank itself was mired in a crisis that resulted in its £1.5bn rescue by American hedge funds and the departure of its chairman, Paul Flowers, following tabloid revelations regarding his private life.

Then, in 2017, two more investors, Bain Capital Credit and JC Flowers, took a 10% stake in the company in a subsequent bailout.

In 2020 the prospect of a sale to Cerberus Capital Management came to nought, and two years ago the bank made a merger approach to Spanish-owned TSB, but nothing transpired.

Last month Co-op Bank completed its first portfolio acquisition in more than a decade, buying Sainsbury’s Bank’s mortgage portfolio for a cash consideration of around £464m.

The portfolio comprises around 3,500 customers with balances of approximately £479m.

In July this year Co-op Bank said it had delivered a “strong” interim financial performance.

In the six months to June 30, 2023, the bank achieved a total income of £266.5m, up from £229.6m, although pre-tax profits were static at £61.8m.