UK challenger bank Monzo is reportedly in talks over a merger with Nordic peer Lunar, acccording to reports from Bloomberg.
Lunar, a digital bank with over 650,000 users across Denmark, Sweden and Norway, last raised €35 million in February to invest in and develop the business and expedite its path to profitability.
Lunar’s previous raise of €28 million in August 2022 came alongside a +500% increase in income during H1 2022.
The bank’s plans to acquire Norwegian Bank, Instabank, failed in September last year, as August funding round proved insufficient to cover “capital needed to meet the capital requirements and obtain the approved from the Norwegian FSA.” Lunar had offered €132 million in March 2022 to purchase Instabank, in efforts to increase its footprint in Norway and open the door to the Finnish market.
A combination with Monzo would provide both banks with a platform to expand across Europe.
Despite posting a loss of £116 million for FY23, Monzo in May reported 2.3x growth in revenue and said it had moved into profitability for the first time in the first two months of the new financial year.
According to Bloomberg, Monzo has been actively exploring other acquisition targets alongside Lunar to help it expand in Europe.
Market watchers have been predicting a spate of M&A activity in the neobanking sector, as firms find it harder to raise fresh capital due to a combination of rate hikes and investor caution.