Aldermore governance probed ahead of flotation

Specialist lender Aldermore came under the Bank of England's scrutiny last year over governance concerns amid plans for a stock market listing, following the departure of its chairman.

The Prudential Regulation Authority launched a probe into the bank's management and governance structure last year after chairman Sir David Arculus left the lender in 2013. Concerns were raised over whether undue investor pressure from a dominant shareholder prompted or influenced Sir David's departure, according to people familiar with the situation.

The issue of board governance has come to the fore as a number of fast-growing "challenger" banks execute plans for initial public offerings.

One person close to the situation said the regulator was concerned by a number of new lenders launching with board members that have little banking experience but can, in some cases, potentially exercise undue influence as majority shareholders.

Aldermore, which is majority-owned by private equity firm AnaCap, floated in March after it was forced to delay listing because of choppy equity markets last October.

Shawbrook followed suit, listing on the London market a couple of weeks later.

The regulator's review into Aldermore, which concluded last year, made recommendations on strengthening corporate governance.

The bank said in its flotation prospectus that the PRA's findings were "generally supportive of Aldermore's governance arrangements", including the "appropriateness of AnaCap's influence and the direction being pursued on board governance".

It said it had already started to make changes under its new chairman Glyn Jones to further strengthen the bank's corporate governance before the watchdog's review.

It also enhanced its board composition last year following conversations with the PRA and ahead of its stock market debut, appointing a number of new non-executive directors.

As at the end of last year, the bank had nine board members, two of whom - Peter Cartwright and Neil Cochrane - were from AnaCap.

Aldermore is part of a group of specialist lenders that have experienced rapid growth over the past few years.

The lender almost doubled pre-tax profits to £50.3m in 2014 from £25.7m the previous year. Net lending to customers grew 42 per cent to £4.8bn.

Its shares have risen by almost a quarter since listing at 192p. They closed on Thursday at 238p.

AnaCap, which holds 79 per cent of Aldermore, raised about £150m from selling a part of its stake in Aldermore on flotation.

The business-focused bank, which was acquired by AnaCap in 2009 when it was called Ruffler bank, raised £75m to fuel growth from the sale of new shares.

AnaCap and the PRA declined to comment.

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