Why a Nubank-Monzo deal could make financial sense

Nu Holdings

29/09/2026 11:49

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
By Jennifer Johnson
LONDON, Sept 29 (Reuters Breakingviews) - Brazilian companies are not exactly major fixtures of the UK M&A scene, especially in financial services. But it’s possible to see why Nu Holdings NU.N, the $59 billion São Paulo-based company that does business as Nubank, would be interested in London-based Monzo. Expanding into Europe, a stable and relatively profitable banking market, could extend the Brazilian group's growth runway, while the returns on offer from an acquisition seem promising. Nu’s investors aren’t so sure, with its New York-listed shares falling 10% on Monday, but the numbers add up.
According to Sky News, the first outlet to report on the duo’s early-stage talks, Monzo could be valued at between £8 billion and £10 billion ($13 billion). That compares with a private mark of £4.5 billion in an October 2024 employee share sale. According to the Sky story, which cited banking sources, a potential deal could be structured as a combination of cash and Nu stock. Monday's share-price plunge for the Brazilian group suggests that investors expect dilution with little upside. They may also have misgivings about the multi-billion-dollar price tag attached to a group that brought in just over £86 million of net income last year.
While Monzo is a minnow compared with $115 billion compatriot Revolut, it does at least have banking licenses in Britain and Ireland, the latter of which could give Nu a springboard to expand across other European Union markets. Crucially, it’s also possible to imagine a relatively healthy return within a few years for the buyer. Assume that the Brazilian group would want to earn a minimum 10% return on invested capital by 2030 on a hypothetical £10 billion acquisition. This would require Monzo producing £1 billion of annual earnings.
If Nu could get Monzo's net profit margin up to 20%, then the required annual revenue by 2030 would be £5 billion. At first glance, that seems like a big lift: the UK group's top line was just £1.7 billion in the 12 months to March 2026, and the net profit margin averaged a mere 6% over the past two years. 
But the goal of £1 billion in earnings by the 2030 financial year is more plausible than it seems. Hitting £5 billion in revenue would require a compound annual revenue growth rate for Monzo of roughly 30%. For context, it managed 39% and 48% in the previous two years respectively. Regarding the margin, meanwhile, 20% is by no means high for a neobank these days. Analysts expect the average net margin for Nu, Chime Financial and Dave to be 24% next year, Visible Alpha consensus data shows. Revolut hit 29% in 2025.
Sceptics might worry that Nu's possible European expansion signals a deterioration in its core Latin American business. Brazil’s central bank has indeed warned of increasing pressure on households’ debt-servicing capacity. Still, that doesn't make buying Monzo a bad idea.
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($1 = 0.7562 pounds)
     
CONTEXT NEWS
Brazil’s Nu Holdings is in early-stage talks with Monzo about a potential combination that could value the London-based digital bank at between £8 billion and £10 billion, Sky News reported on September 26.
An acquisition is one of two options being explored by Monzo’s board, according to Sky News, which cited a source familiar with the process. The other option is a new funding round expected to value the group at over £8 billion. Sky News later reported on September 27 that buyout shop Advent had held initial talks about acquiring a minority stake in Monzo.

(Editing by Liam Proud; Production by Varun H K)
((For previous columns by the author, Reuters customers can click on JOHNSON/Jennifer.Johnson@thomsonreuters.com))