London, June 23, 2026, 10:04 BST
Lloyds Banking Group was off 0.6% at 108.55 pence late Tuesday morning, giving up some of Monday’s jump as London stocks slipped. NatWest lost 0.9%. Barclays dipped 0.1%. The FTSE 100 was showing a decline of around 0.9%.
Lloyds shares eased after news it’s looking at a possible bid for Aldermore, the UK small-business lender up for sale by South Africa’s FirstRand. Sources told Reuters Aldermore’s appeal is its small-business and project finance lending, but said Lloyds might not move forward with a formal offer.
Motor finance is the sticking point. FirstRand has put aside £750 million to cover payouts tied to mis-sold car loans. Any bidder will likely want an indemnity to guard against future claims. Shawbrook is looking at a merger with Aldermore too, so there’s extra competition before the auction has even started.
Lloyds finished 3.9% higher at 109.20 pence on Monday, beating the FTSE 100’s 0.7% move. NatWest and Barclays each gained more than 3% as banks rallied on expectations for a smooth political handover in the UK. “The expected timetable at least minimises the uncertainty for investors,” said Chris Beauchamp, chief market analyst at IG. MarketWatch
UK services PMI fell to 48.7 in June, the lowest since January 2023, giving a weaker domestic signal on Tuesday. Below 50 signals contraction. New business and jobs both dropped fast. S&P Global economist Chris Williamson said jobs were falling at “a worryingly high rate.” Reuters
Lloyds came into deal talks with earnings momentum. First-quarter pretax profit jumped 33% to £2 billion, ahead of forecasts. Lending income went up and costs dropped. The bank kept its target for return on tangible equity above 16% for the year and did not add any new provision for its motor-finance exposure.
Lloyds is under scrutiny for how it uses capital. The bank says it will weigh more shareholder payouts twice a year as it works to lower its common equity tier-one ratio to 13% by the end of 2026. A possible bid for Aldermore would need to stack up against what more dividends or buybacks could deliver.
A deal could still fall through over price or liability protection. If the UK economy slows further, Aldermore’s small-business loan book faces higher credit risks. Not enough indemnity would also leave Lloyds facing more compensation claims. Political and fiscal uncertainty is adding to the strain. “Bond markets already viewed Britain as ‘higher risk,’” AJ Bell’s Russ Mould said. Investors now want to see signs Lloyds is in formal talks to sell, and what the terms are. Reuters
