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Challenger bank Shawbrook rejects £825m offer

Challenger bank Shawbrook has snubbed an £825 million offer tabled by private equity firms Pollen Street Capital and BC Partners.

The specialist bank said the board has rejected the proposal, which would have handed shareholders 330p per share in cash.

The firms made an approach on Friday to buy the lender through a new company jointly owned by the two funds.

Shawbrook revealed its position on the proposed tie-up as it published annual results showing underlying pre-tax profits had risen 14% to £91.4 million in the year to the end of December.

Stripping out the costs of a controls breach in its business and finance arm, pre-tax profits climbed 29% to £103.4 million.

The bank had warned in June last year that profits would take a hit after discovering irregularities in its asset finance business.

Chief executive Steve Pateman said the firm had driven growth amid a backdrop of political uncertainty led by the Brexit vote and the US election of Donald Trump.

" We have achieved sustainable growth across all of our lending divisions and delivered strong risk adjusted returns.

"Notwithstanding the changes in the political environment and the subsequent uncertainty arising in the macroeconomic climate, we have continued to execute our plans through deep market knowledge, innovation and through close understanding and awareness of our customers' needs."

Net operating income continued to rise, climbing to £209.6 million over the period, up from £166.9 million in 2015.

The takeover approach comes after Pollen Street Capital floated Shawbrook on the London Stock Exchange at 290p a share in April 2015, valuing the bank at £725 million.

Mr Pateman added: "Shawbrook's journey since listing has been somewhat more challenging than anticipated due to the changes in the macroeconomic climate and outlook and the identification of the controls breach in the business finance division announced on 28 June 2016.

"However, Shawbrook today has a strengthened management team and sound foundations, making it well placed to take advantage of the opportunities that will continue to arise from the structural changes taking place in the UK banking market."

Shawbrook employs 600 people in 10 offices across the UK.

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