Aldermore is preparing to enter the race to takeover the Co-operative Bank, which is valued at £3.5bn. 

The challenger bank is working with advisers at BNP Paribas on an offer, reports Sky News, and intends to table a bid ahead of a deadline set by the Co-operative Bank early next month. 

The UK bank will compete against mid-sized rival lender Shawbrook, which reportedly approached the former mutual lender about an offer last month. 

Aldermore, founded in 2009, is owned by South African financial services business FirstRand Group, which has operations ranging from retail banking to asset management. 

Aldermore, which was listed on the London Stock Exchange in 2015, has mortgages, savings, business and motor finance divisions. The FTSE-250 listed business has around 800,000 customers. 

In 2021, the Co-operative Bank approached Spanish-owned TSB about a merger, but these talks broke down. 

The Co-operative Bank has been a weaker operation since a £1.5bn black hole was discovered in its accounts in 2013, forcing it into a rescue by a group of US hedge funds. 

The troubled lender required another bailout in 2017, when two major investors — Bain Capital Credit and JC Flowers — took a 10% stake in the company.