Monzo eyes merger with Danish neobank Lunar

Britain’s flagship digital bank Monzo is reportedly in acquisition talks with Lunar, its Danish rival which last year was valued at $2.2bn.

The discussions were reported by Bloomberg, which said the deal came about from Monzo’s desire to expand into Europe.

Bloomberg described the discussions as preliminary with no guarantee a deal would be reached, and that Monzo is also exploring other potential targets in Europe.

Monzo declined to comment when contacted by AltFi.

Lunar offerers retail and business banking services in Denmark, Sweden and Norway, with a proposition broadly similar to that of Monzo’s in the UK and US.

Last year Lunar raised €70m from existing investors including Tencent, Heartland, IDC Ventures and Kinnevik, with an additional €35m raised this February, rounds that reportedly came at a $2.2bn valuation.

The bank also has the backing of Hollywood actor Will Ferrell, who invested in the business and starred in one of its marketing campaigns last year.

CEO Ken Villum Klausen has previously told AltFi that Lunar is keen to expand beyond the Nordics when the time is right.

“When you feel as though you have saturated the markets in the Nordic region, you have larger ambitions over time than just being in the Nordics,” he said in March 2022.

“But it’s not like we are in a rush for it right now. We just want to go in depth in all of those markets before we potentially embark on a journey outside of the Nordics. But it is something we are looking into.”

For Monzo, the tie-up would enable the bank to rapidly expand into new European markets using Lunar’s European banking licence, avoiding a lengthy licence application.

Monzo’s rival Starling spent years working to secure a European banking licence, before ultimately deciding to change course and focus on offering banking-as-a-service instead.