Ryan Bembridge

March 11, 2019

Precise Mortgages parent Charter Court Financial Services and OneSavings Bank are in final talks over a merger, the pair confirmed.

Andy Golding, chief executive of OneSavings Bank, which owns Kent Reliance, is set to become CEO of the combined group.

The merger would create a lender worth more than £1.6bn.

A statement from both boards said the move would create a specialist mortgage lender with greater scale and resources to deploy on growth opportunities.

The group could also create a comprehensive and diversified platform, leverage complimentary underwriting capabilities, establish a resilient and diversified retail-wholesale funding platform and maintain two broker platforms.

Under the proposal OneSavings would acquire all the issued shares of Charter Court, with 0.8253 new OneSavings shares being exchanged for each Charter Court share.

After that OneSavings Bank shareholders would own 55% of the company, with Charter Court shareholders owning the remaining 45%.

OneSavings Bank is required by 5pm on 6 April 2019 to announce whether it has a firm intention to make an offer.

OneSavings Bank operates with the following brands: Kent Reliance; InterBay Commercial; Heritable Development Finance; Prestige Finance; Guernsey Home Loans; Jersey Home Loans; and OSB India.

As well as Precise Mortgages, Charter Court also owns Exact Mortgage Experts and Charter Savings Bank.

Charter Court Financial Services is based in Wolverhampton, while OneSavings Bank is headquartered in Chatham, Kent.

The move is subject to mutual due diligence and approval by both group boards.

Nick Field, director at international mid-market M&A firm, Livingstone, said:  “As both OSB and Charter Court have attractive net interest margins around 3%, a track record of good quality growth, and strong positions in specialist products we see this as largely a merger of equals, which is reflected in the all-share deal structure.

“Because both businesses lend across a relatively full range of specialist products and have each invested to develop both retail and wholesale funding capabilities, we would expect operating costs to be the primary area of short-term synergy opportunity.

“As the UK specialist finance market is undoubtedly experiencing some reduction in demand arising from economic uncertainty, consolidation presents a compelling opportunity to deliver incremental profitability independent of market growth.”

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