Yorkshire and Leeds Building Societies in Talks to Purchase Atom Bank
In a move that signifies the growing ambitions of UK’s building societies to scale up and compete with larger banks, Yorkshire Building Society and Leeds Building Society are reportedly considering the purchase of online lender, Atom Bank. The information, as reported by the Financial Times, suggests a continued trend of consolidation within the sector.
Atom Bank Attracts Interest
Atom Bank, which boasts of shareholders including Spain’s BBVA and Toscafund, is currently seeking a valuation of over £600m. The digital lender, established in 2014, has around 250,000 customers and offers substantial savings and mortgage services. The bid for Atom is being managed by global investment banking firm, Jefferies.
Building Societies Seek to Expand
The interest from Yorkshire and Leeds building societies is reflective of the wider trend where UK building societies are keen to strengthen their position against larger banks and diversify the range of services offered to customers. Despite being an online bank, Atom has remained smaller than retail fintech rivals like Revolut and Monzo, which have 70 million and 15 million customers respectively.
Previous Plans for Atom
Initially, Atom had plans to go public with a stock market listing. However, the owners later decided to explore the possibility of a sale instead.
Notable Transactions in the Sector
Recent significant deals in the banking sector include the acquisition of Virgin Money by Nationwide for £2.9bn ($3.9bn) in 2024. This acquisition added a business banking arm to Nationwide and increased its mortgage assets. In another noteworthy deal, Coventry Building Society acquired the Co-operative Bank for £780m in the previous year.
About Yorkshire and Leeds Building Societies
Both Yorkshire and Leeds Building Societies have a rich history and a significant presence in the UK. Yorkshire Building Society, established in 1864, has grown into one of the largest mutual institutions in the UK, boasting of 3.1 million members. Last year, it reported a pre-tax profit of £377.9 million and a rise in its loan book to £10 billion. Leeds Building Society, on the other hand, recorded a pre-tax profit of £198.6 million over the same period.
Despite the reported interest, Atom, Leeds Building Society, Yorkshire Building Society, and Jefferies have declined to comment on the potential deal.
Conclusion
This potential purchase of Atom Bank by Yorkshire and Leeds Building Societies showcases a trend of consolidation and growth within the UK’s building societies. As they continue to expand and diversify their services, they are becoming increasingly competitive against larger banks.
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