Brazilian digital banking group Nu Holdings has opened preliminary talks regarding an acquisition of UK-based Monzo.
A potential transaction will value the lender between £8bn ($10.5bn) and £10bn ($13.2bn), according to a report by Sky News.
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Nu Holdings is negotiating outline terms with the British lender.
Monzo has retained investment bankers from Morgan Stanley and Qatalyst to assist with the process.
According to a source close to the discussions, a buyout by Nu Holdings represents one of two core strategies under review by Monzo’s board and investors.
The alternative option under consideration is an equity fundraising round exceeding an £8bn valuation, intended to finance further growth into mainland Europe.
Banking sources indicate that any agreed transaction between the two companies would likely combine cash and equity.
Monzo currently maintains 16 million accounts, comprising 15 million consumer banking users and one million business clients.
The company was valued at £4.5bn during a secondary share sale in October 2024, with its valuation rising over the subsequent two-year period.
Its latest product release is Aura, a credit card that directs cashback returns into investments as cardholders spend.
UK government officials and representatives from the London Stock Exchange have lobbied for Monzo to conduct a domestic initial public offering over the next two years should a trade sale not occur, the news publication said.
However, a US listing remains under consideration due to the composition of the bank’s shareholder base, leaving a London flotation unconfirmed, the report added.
