JOHANNESBERG, May 13 – 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 the South African lender prepares to exit its European operations.
The South African lender said the dual-adviser structure is intended to broaden the pool of potential buyers for the specialist banking subsidiary, which it acquired in 2017 as part of its international expansion strategy.
FirstRand announced in April that it would pursue “an orderly ownership transition” for Aldermore after sharply increasing provisions linked to compensation claims in the UK motor-finance sector.
The bank raised provisions tied to customer redress claims by £510 million ($694 million), bringing the total provision to £750 million following the UK Financial Conduct Authority’s finalized compensation framework.
The wider UK banking industry is expected to pay around £9.1 billion to customers over claims involving allegedly mis-sold motor-finance loans, with approximately 12.1 million loans potentially eligible for compensation.
Several lenders, including Lloyds Banking Group Plc and Close Brothers Group Plc, had criticized the regulator’s proposals as overly strict.
FirstRand has maintained that the compensation framework is “unfair and disproportionate,” though it said it would not challenge the plan legally.
Aldermore Group includes MotoNovo Finance, one of the UK’s major motor-finance businesses, alongside Aldermore Bank, which focuses on small-business lending and residential mortgages.
The UK operation contributes roughly 10% of FirstRand’s total earnings and accounts for about 20% of its balance sheet, according to the lender.
The planned exit reflects broader pressure across the banking industry as rising funding costs, tighter regulation and intensifying competition push financial institutions to reassess international operations and non-core assets.
Representatives for Bank of America declined to comment, while Rand Merchant Bank did not immediately respond to requests for comment.
