FirstRand Moves to Sell UK Aldermore Unit, Appoints Bank of America and RMB as Advisers

Mintesinot Niggusie

South African lender FirstRand Ltd. has appointed Bank of America Corp. and Rand Merchant Bank (RMB) to advise on the planned sale of its UK-based Aldermore Group, as it moves toward exiting its European banking operations.

Aldermore Group includes MotoNovo Finance, a major UK motor-finance provider, as well as Aldermore Bank, which focuses on small and medium-sized enterprise lending and residential mortgages.

The planned divestment follows FirstRand’s decision to pursue an “orderly ownership transition” for the business, after increasing provisions linked to motor-finance compensation claims in the United Kingdom. Those provisions were raised by 510 million British pounds.

The broader UK banking industry is expected to pay about 9.1 billion British pounds in compensation related to allegedly mis-sold motor-finance loans. FirstRand has described the compensation framework as “unfair and disproportionate,” while stating it will not pursue a legal challenge.

The UK operation contributes roughly 10% of FirstRand’s earnings and accounts for about 20% of its balance sheet. The planned exit reflects a wider reassessment of international portfolios due to higher funding costs and tighter regulation.