According to reports from Bloomberg, Monzo, a prominent challenger bank in the UK, is currently in advanced talks with Lunar, its Nordic peer, to explore a merger opportunity. Lunar, a digital bank with a user base exceeding 650,000 across Denmark, Sweden, and Norway, recently secured €35 million in February to fuel its business development and hasten its path to profitability.
Lunar’s notable accomplishment in H1 2022 included a staggering 500% increase in income, accompanied by its successful €28 million funding round in August 2022. However, Lunar faced a setback in September of the same year when its plans to acquire Norwegian Bank, Instabank, fell through due to insufficient funding from its August round. Lunar had intended to purchase Instabank for €132 million in March 2022 to bolster its presence in Norway and gain entry into the Finnish market.
A merger between Monzo and Lunar would offer a strategic platform for both banks to expand their operations throughout Europe. Monzo, despite reporting a loss of £116 million for FY23, revealed a remarkable 2.3x revenue growth in May and announced its attainment of profitability during the first two months of the new financial year.
In addition to the Lunar merger discussions, Monzo has actively been exploring other acquisition targets to facilitate its expansion plans across Europe, as reported by Bloomberg. Observers of the neobanking sector have anticipated an increase in M&A activity, as firms encounter challenges in raising fresh capital due to factors such as rising interest rates and investor apprehension.
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