Monzo may be a household name in the UK but in much of the world it is probably known only — if at all — as the sponsor of football club Coventry City. While the digital bank, like Coventry, has done a good job of fighting it out as a small team in the big leagues, a potential takeover bid from Brazil’s Nubank could create a more level playing field. Nu, an online lender listed in New York, has approached Monzo about an acquisition valuing the British business at £8bn to £10bn, according to people familiar with the matter.

Separately, Monzo has spoken with private equity firms about raising cash to help go it alone. The big challenge is that Monzo’s easiest wins are behind it. True, it has amassed up to 16mn UK customers and about £26bn of deposits as of March, and its pre-tax profit is growing smartly.

But only a minority of customers consider it their main bank. Its loan book was just £2.3bn in March, and building it will require a lot of time and patience. There is also a huge gulf between the UK’s traditional big four lenders — Lloyds, Nat West, Barclays and HSBC — and the rest of the sector; the only bank that has closed the gap is Santander, a global group which made a series of acquisitions.

Teaming up with Nu could provide resources and offer a straightforward exit for Monzo’s existing venture capital backers. The Brazilian bank’s US-listed shares trade at roughly 5 times book value, based on S&P Capital IQ data. An £8bn price for Monzo would imply the same multiple, plus a 30 per cent takeover premium.

That said, the UK bank might be able to argue for more because it has an EU banking licence, which gives it options for future growth. Nu also has an incentive to pay a healthy price — even if the 8 per cent drop in its shares on Monday morning suggests investors will take some convincing. While it’s far more profitable than Monzo, thanks to a $39bn lending portfolio, it is also riskier.

Adding a stable, deposit-driven UK business might counter the volatility of its Latin American markets and thus reduce its implied cost of capital. That’s similar to the model Spain’s Santander and BBVA have pursued. Any potential takeover of a UK company tends to provoke hand-wringing about the future of the country’s financial markets.

Monzo, long seen as a potential candidate for a London listing, would no doubt renew anxieties about the City’s status. Yet such fears may be misplaced. Nu chief executive David Vélez has previously considered moving the group’s legal domicile to the UK; buying a British bank would give him more reason to do so.

Monzo’s tie-up with a Premier League football team could be apt in that regard. The league is seen as an English success despite an influx of foreign money over the years. Why shouldn’t the City be the same? Being small and scrappy has its charms, but sometimes it’s nice to actually win for a change.